GIFT   OF 
Dean  Frank  H.    Probert 


D.  B.  Huntlev 


THE  ECONOMICS 
OF  MINING 


BY 

T.  A.  RICKARD  H.  C.  HOOVER 

W.  R.  INGALLS  R.  OILMAN  BROWN 

And  other  Specialists 


EDITED  BY  T.  A.  RICKARD 


FIRST  EDITION 


1905 
THE   ENGINEERING   AND   MINING   JOURNAL 

505  Pearl  Street,  New  Yorl£ 
20  Bucklersbury,  London,  E.  C. 


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CONTENTS 


PAGE. 

Causes  of  Failure  in  Mining  (Percy  Williams) 1 

The  Valuation  of  Mines    (Editorial) 5 

Ore    Sorting    (Editorial) 8 

Sorting  at  Johannesburg  (T.  Lane  Carter) 10 

Cost  of  Shaft  Sinking  by  Hand 15 

Gold  Mining  as  an  Investment  (Editorial) 17 

Mining  Risks    (Editorial) 20 

Mining  Methods  at  Johannesburg  (T.  Lane  Carter) 22 

Notes  on  Zinc  Mining  ( W.  Geo.  Waring) 28 

Gold  Mine  Accounts   (H.  C  Hoover) 34 

The    Payment    of    Extensions    of    Mining    Plant    out    of 

Revenue    (Edward   Walker) 38 

Ore  Treatment  at  Kalgoorlie  (H.  C.  Hoover) 44 

Gold  Mining  Accounts  (Cnas.  V.  Jenkins) 50 

Mine  Valuation  by  Government   (Editorial) 53 

Cost  per  Ton  as  a  Basis  of  Mine  Valuation    (R.  Gilman 

Brown) 56 

Mine  Accounts   (Theo.  B.  Comstock) 62 

Ore-Breaking  and  Sorting  on  the  Rand  (H.  S.  Denny) 68 

Mining  Investment    (Editorial) 77 

A  Card  System  for  Mine  Accounts  (F.  W.  Den  ton) 80 

Investment  in  Mines    (Editorial) 87 

Gold  Mine  Accounts  (R.  Gilman  Brown) 91 

Card  Systems  for  Mine  Accounts  (Theo.  B.  Comstock) 94 

Appraising    Futures    (Editorial) 98 

Appraising  the  Value  of  a  Mine 101 

Mining  Costs  at  Cripple  Creek  ( J.  R.  Finlay) 103 

Some  Aspects  of  Mining  Finance — I   (Editorial) 110 

Some  Aspects  of  Mining  Finance — II    (Editorial) 115 

Some  Aspects  of  Mining  Finance — III    (Editorial) 119 

Some  Aspects  of  Mining  Finance — IV  (Editorial)... 122 

Some  Aspects  of  Mining  Finance — V   (Editorial) 125 

Mining  Finance 129 

Resuing  in  Underground  Work  (F.  C.  Roberts) 131 


M1S7168 


iv  CONTENTS. 

PAGE. 

Gold  Mining  in  Rhodesia  (F.  C.  Roberts) 135 

Mine  Labor  and   Costs   on  the   Witwatersrand    (T.   Lane 

Carter) 150 

Mining  Costs  at  Cripple  Creek  (H.  Foster  Bain) 154 

Mining   and    Milling   in  the   Mojave   Desert    (Eugene    H. 

Barton) 157 

Cost  of  Mining  Zinc  Ore  in  the  Joplin  District  (W.  Spencer 

Hutchinson) 160 

Mining  in  Rhodesia   (Wallace  Broad) 167 

The    Economic    Ratio    of    Treatment    Capacity    to    Ore- 
Reserves   (H.  C.  Hoover) 173 

Equipment  and  Ore-Reserves— I  (Editorial) 180 

Equipment  and  Ore-Reserves — II    (Editorial) 182 

Equipment  and  Ore-Reserves — III    (Editorial) 185 

Mine  Equipment  and  Ore-Reserves  (E.  Gybbon  Spilsbury)  . .  187 

Mine  Equipment  and  Ore-Reserves  (Benj.  B.  Lawrence)...  189 

Another  Aspect  of  Mining  Finance 190 

The    Economic    Ratio    of    Treatment    Capacity    to    Ore- 
Reserves    (W.  R.  Ingalls) 194 

Mining  in  Rhodesia  (F.  C.  Roberts) 200 

Secret  Reserves    (Editorial) 205 

Secret  Reserves   (F.  H.  Bathurst) 206 

The  Valuation  of  Gold  Mines  (H.  c!  Hoover) . .  211 

Treatment  Capacity  and  Ore-Reserves  (R.  Gilman  Brown).  217 

Amortization    (F.   Hobart) 221 

Valuation  of  Gold  Mines  (Robert  Stevenson) 225 

Mine  Equipment  and  Ore-Reserves   (Geo.  J.  Bancroft) 227 

The    Economic    Ratio    of    Treatment    Capacity    to    Ore- 
Reserves   (G.  A.  Denny) 232 

Equipment  and  Ore-Reserves— IV   (Editorial)    244 

Equipment,  and  Ore-Reserves— V   (Editorial) 246 

Ore-Reserves  in  Gold  Mines   ( J.  H.  Curie) 249 

The  Personal  Equation   (Editorial) 253 

Ore-Reserves    (H.   C.   Hoover) 255 

No-Liability  Companies  (C.  S.  Herzig) 260 

Engineers'  Estimates  of  Costs  (W.  R.  Ingalls) 264 

Gold  Dredging  in  California    (Chas.   G.  Yale) 268 

Mining  in  Missouri  (W.  R.  Ingalls) 271 

Secret  Reserves    (Editorial) 275 

Equipment  and  Ore-Reserves— V  (Editorial) 278 

Secret   Reserves 281 

Mine  Equipment  and  Ore-Reserves  (R.  Gilman  Brown)  . .  285 

Gold  Dredging  at  Oroville  (H.  D.  Smith,  E.  W.  Stebbins) . .  289 


CONTENTS.  v 

PAGE. 

The  Basis  of  Value    (Editorial) 300 

Equipment  and  Ore-Reserves  (C.  S.  Palmer) 302 

Leasing  at  Cripple  Creek  (J.  R.  Finlay) 305 

Secrecy  in   Mining    (Editorial) 309 

Mine   Valuation    (Editorial) 311 

Mine  Valuation   (E.  H.  W.) 313 

Gravel-Mining    Costs    in    Alaska    and    Northwest    Canada 

(Chester  W.    Purington) 317 

The  Cost  of  Mining  (Editorial) 323 

The  Cost  of  Mining— I  ( W.  R.  Ingalls) 324 

The  Cost  of  Mining  ( J.  R.  Finlay) 333 

Mine   Reserves    (F.   H.    Bathurst) 339 

The  Cost  of  Mining   (Philip  Argall) ^ 342 

The  Cost  of  Mining  (R.  Gilman  Brown) 347 

The  Cost  of  Mining  (F.  C.  Roberts) 350 

Cost  of  Chlorinating  Cripple  Creek  Ores  (Philip  Argall)  . . .  356 

Cost  of  Mining  and  Milling  (R.  J.  Grant) 359 

Hoist  by  His  Own  Petard  (Editorial) 364 

Dredging  at  Oroville   (L.  J.  Hohl) 367 

The  Cost  of  Mining  (E.  A.  H.  Tays) 372 

Some  Pumping  Data  (R.  Gilman  Brown) 378 

The  Cost  of  Mining  (James  Humes) 384 

The  Cost  of  Mining  (Editorial) 387 

Deep    Mining    (Editorial) 390 

Notes  on  Mine  Reports  (Chester  F.  Lee) 392 

Mine  Reports    (Editorial) 398 

The  Interval  between  Levels  (Editorial) 400 

The  Cost  of  Mining— II  ( W,  R.  Ingalls) 403 


PREFACE 

THE  pages  of  this  book  furnish  a  reprint  of  a  number 
of  articles,  bearing  upon  the  cost  of  mining,  which  have 
appeared  in  THE  ENGINEERING  AND  MINING  JOURNAL 
between  January,  1903,  and  June,  1905,  a  period  of  two 
and  a  half  years.  As  affecting  the  economic  aspect  of  a 
world-wide  problem,  I  have  included  a  number  of  articles 
dealing  with  those  ethical  and  financial  considerations 
which  are  no  less  important  to  the  industry  than  the 
scientific  principles  underlying  the  actual  breaking  and 
milling  of  ore  at  the  mine.  For  the  editorial  comment  I 
am  responsible;  some  of  it,  in  the  light  of  ampler  evi- 
dence or  maturer  thought,  I  would  like  to  change;  but 
any  alteration  would  involve  a  recasting  of  the  material 
detrimental  to  its  value  as  a  record  of  professional  dis- 
cussion during  the  period  mentioned. 

T.  A.  RICKARD. 

New  York,  June  30,  1905. 


CAUSES  OF  FAILURE  IN  MINING 

(January  31,   1903.) 

To  The  Editor: 

SIR — It  has  been  estimated  that  95  per  cent  of  the  com- 
mercial and  industrial  enterprises  which  are  started  every 
year  ultimately  prove  unprofitable.  Such  business  fail- 
ures are  primarily  due  to  incorrect  estimation  of  the  trade 
conditions  which  obtain  in  every  field  of  commercial  oper- 
ation. These  conditions  are  innumerable,  intricate  and 
constantly  changing,  but  nearly  all  of  them  are  the  result 
of  merciless  competition. 

There  is  relatively  less  competition  in  the  business  of 
mining  the  precious  metals.  Yet  even  with  competition 
largely  eliminated,  I  do  not  believe  that  mining  enterprises 
have  scored  any  less  percentage  of  failures  than  the  purely 
commercial,  with  their  increased  attendant  hazards  of 
endless  competition  constantly  accelerated  and  intensified 
by  cheaper  processes  of  manufacture  and  various  trade 
combinations. 

In  weighing  these  opposing  conditions  it  would  appear 
as  if  the  investor  in  mining  enterprises  should  have  a 
better  "run  for  his  money"  than  statistics  would  seem  to 
indicate. 

What  are  the  causes  of  unsuccessful  mining? 

There  are  many  causes,  some  of  which  might  be  elimi- 
nated if  the  investor  could  be  shown  them.  Nearly  every- 
one has,  at  some  time  or  another,  bought  mining  stock 
or  "taken  a  flyer" ;  yet  how  many  of  those  whose  invest- 
ments have  proven  disastrous  have  re-invested  or  "tried 
again"  ?  Their  speculative  fever  subsides  after  the  bleed- 
ing. As  a  result,  mining  engineers  are  far  less  busy  than 
they  might  be,  and  the  development  of  the  mineral  re- 
sources of  various  parts  of  our  country  is  thereby  much 
retarded.  A  discussion  of  these  conditions,  their  causes, 


f. 


2  THE  ECONOMICS  OF  MINING 

and  their  ultimate  elimination  would  be  timely,  and  it 
might  show  many  unsuccessful  investors  the  proper  way 
to  try  again. 

After  a  good  many  years  of  activity  in  the  mining  and 
metallurgical  field,  I  feel  that  I  can  mention  a  few  causes 
of  failure  of  mining  enterprises  and  suggest  a  few  reme- 
dies. If  by  writing  this  introductory  letter  and  inviting 
the  consideration  of  this  subject  I  can  induce  some  of  my 
fellow-workers  to  grasp  their  pens  and  express  their 
ideas,  I  believe  that  the  investing  public  might  profit  from 
the  discussion. 

I. — STARTING  WRONG. 

Don't  invest  money  on  the  strength  of  a  printed  pros- 
pectus or  the  advice  of  an  ''interested  friend"  without 
preliminary  investigation  by  a  reliable  engineer. 

Don't  "take  a  flyer"  in  mining,  but  invest  your  money 
with  the  same  care  and  discretion  you  would  use  in  buy- 
ing bank  stocks,  real  estate  or  a  silk  factory. 

Don't  trust  altogether  to  luck.  Use  a  little  sound  busi- 
ness sense. 

Don't  invest  in  a  mining  company  that  guarantees 
dividends.  Dame  Nature  has  something  to  say  about  that. 

Don't  invest  in  a  mining  company  that  is  selling  treas- 
ury stock  and  paying  dividends  at  the  same  time.  If  the 
mine  is  earning  dividends  the  company  owning  it  seldom 
has  a  legitimate  interest  in  selling  more  stock. 

II. — INVESTIGATION  AND  MANAGEMENT. 

Unless  you  have  had  sufficient  experience  as  a  mining 
engineer  and  metallurgist,  and  if  the  amount  of  your  con- 
templated investment  is  considerable,  employ  a  reliable, 
experienced  engineer  to  report  on  the  property.  Don't 
do  this  yourself  unless  you  are  born  eternally  lucky. 
Every  man  to  his  trade. 

Once  you  have  invested  in  a  mining  enterprise,  insist 


CAUSES  OF  FAILURE  IN  MINING  3 

on  frequent  and  complete  reports  covering  operations  of 
the  mine.  Employ  a  competent  superintendent. 

Don't  take  your  son  or  your  nephew  or  your  clerk  out 
of  your  store  or  business  house  and  send  him  to  Arizona 
or  Colorado  to  "run  things"  for  you  at  the  mine.  Sell 
out  first. 

Once  you  are  assured  of  their  qualifications,  put  every 
reasonable  confidence  in  your  manager  and  superinten- 
dent. Give  them  a  fair  show  to  make  a  dividend  payer 
of  your  mining  investment. 

If  you  are  a  director  in  a  mining  company,  do  not  force 
the  manager  or  superintendent  to  find  a  job  for  all  of 
your  unsuccessful  friends  and  relatives.  Let  him  hire 
his  own  men.  Don't  convert  your  mining  property  into 
an  asylum  for  ne'er-do-wells. 

III. — OPERATION  OF  MINES. 

Don't  spend  all  of  your  capital  on  top  of  the  ground. 
Do  some  digging.  Don't  buy  too  much  territory.  Mining 
claims  are  cheap.  Concentrate  your  operations  and  your 
capital  at  the  points  where  your  orebodies  have  been 
found.  Additional  surface  territory  means  nothing  unless 
it  contains  ore. 

Don't  expect  your  ore  to  grow  richer  with  depth.  It 
may  gain  in  quantity,  but  seldom  in  quality. 

Don't  build  a  mill  or  a  smelter  or  reduction  works  until 
you  are  certain  you  have  enough  ore  available  to  keep 
the  mill  in  steady  operation  until  at  least  its  initial  cost  is 
recovered.  This  advice  is  ancient  and  worn  from  constant 
repetition,  yet  there  are  innumerable  mills  and  smelters 
dotting  our  Western  landscapes  to-day  which  hardly 
turned  a  wheel  because  the  supply  of  ore  was  insufficient 
or  unsuitable. 

Don't  build  your  reduction  works  until  you  have  as- 
sured yourself  beyond  all  doubt  as  to  what  kind  of  a  pro- 
cess your  ore  requires  to  yield  up  its  values.  You  can 


4  THE  ECONOMICS  OF  MINING 

adapt  the  mill  'to  the  requirements  of  the  ore,  but  you 
cannot  manufacture  an  ore  to  run  through  any  particular 
mill  or  smelter.  Spend  time  and  money  in  rinding  out, 
first' what  process  is  peculiarly  adapted  to  your  ore,  then 
you  will  leave  behind  you  no  silent  enduring  monument 
to  folly.  Employ  a  competent,  experienced  metallurgist 
to  practically  test  your  ores  before  building  a  mill.  Most 
any  process  works  all  right  on  most  any  ore  in  a  chemical 
laboratory,  but  in  actual  work  on  a  commercial  scale  there 
are  other  conditions  to  contend  with.  It  is  well  to  find 
out  what  these  conditions  are  before  spending  money  on 
reduction  works. 

I  realize  that  the  suggestions  I  have  made  and  the  rem- 
edies I  have  advanced  with  a  view  to  insuring  greater 
safety  in  mining  investments,  are  ridiculously  simple  and 
self-evident  to  the  veriest  tenderfoot ;  but  this  being  the 
case,  I  will  leave  it  to  someone  else  to  state  why  business 
men  continue  year  after  year  to  make  the  same  mistakes 
in  their  mining  investments  instead  of  proceeding  along 
these  lines  of  greater  safety.  They  do  not  seem  to  learn 
by  experience,  why — I  do  not  know.  However,  I  would 
like  to  see  these  gentlemen  have  a  better  "run  for  their 
money."  Can  we  not  help  them  ? 

PERCY  WILLIAMS. 

Prescott,  Arizona,  January  6,  1903. 


THE  VALUATION  OF  MINES 

(Editorial,  January  31,    1903.) 

In  this  issue  a  correspondent  brings  forward  a  per- 
tinent query  concerning  the  unprofitable  result  of  a  large 
percentage  of  mining  investments.  It  is  a  broad  ques- 
tion, which  may  be  answered  humorously,  cynically  or 
straightforwardly,  according  to  the  mood  of  the  person 
interrogated.  We  can  only  reply  in  all  seriousness,  for 
it  is  a  subject  fundamental  to  the  mining  industry.  Our 
correspondent  gives  a  number  of  indubitable  causes  for 
failure,  but  we  think  he  has  omitted  the  most  important 
of  them  all.  We  refer  to  the  over-valuation  of  mines. 

In  order  to  discuss  the  matter  profitably  it  is  neces- 
sary to  take  the  simplest  case  of  all,  a  valuable  gold 
mine.  Eliminate  from  the  inquiry  the  undeveloped 
mines  and  prospects;  disregard,  for  the  moment,  the 
essential  uncertainty  of  all  the  occurrences  of  ore  in 
nature  and  the  difficulty  of  estimating  the  quantity  avail- 
able ;  restrict  the  scope  of  the  investigation  so  as  to  avoid 
the  complications  due  to  varying  metal  markets — so  potent 
for  good  and  ill  in  the  mining  of  the  baser  metals;  take 
it  for  granted  that  you  are  dealing  with  a  known  valuable 
deposit  of  gold  ore  which  can  be  profitably  worked  under 
the  given  conditions  of  time  and  place,  and  then  ask: 
What  can  make  it  the  basis  of  a  losing  investment? 

The  answer  can  include  causes  as  numerous  as  the 
many  vagaries  of  human  nature,  but  the  principal  source 
of  trouble  arises,  we  believe,  from  over-valuation.  The 
appraisement  of  mines  has  undergone  striking  develop- 
ment during  recent  years  and  it  merits  fuller  discussion 
than  the  present  occasion  will  permit.  A  mine  may  be 
said  to  be  worth  a  given  sum  when  it  can  return  that 


6  THE  ECONOMICS  OF  MINING 

sum  as  profit  from  operations  covering  a  term  of  years, 
plus  the  interest  on  the  investment  during  the  period 
consumed  in  the  return  of  the  stated  price.  When  this 
is  translated  into  a  share  capital  the  conditions  are  the 
same,  although  the  amount  of  interest  which  should  be 
returned  in  the  form  of  dividends  will  vary  in  percentage 
according  to  the  hazard  of  different  kinds  of  mining. 

Apart  from  specific  causes,  there  are  several  general 
influences  which  militate  against  true  values.  There  is 
that  expectation  of  better  things,  that  resolute  hopeful- 
ness which  is  necessary  to  all  exploratory  work.  We 
cannot  do  without  it,  but  it  should  be  so  restrained  as  to 
regard  the  rules  of  arithmetic.  It  is  natural  to  the  owner, 
to  the  manager,  to  the  intending  purchaser,  to  all  the 
persons  to  whom  the  success  of  the  mine  ministers,  di- 
rectly or  indirectly;  therefore,  all  the  more  reason  for 
taking  care  that  the  valuation  of  the  mine  be  intrusted 
to  those  whose  judgment  is  in  no  wise  vitiated  either 
by  sanguine  sentiment  or  that  disturbing  influence  which 
is  covered  by  the  term  participation.  To  summarize, 
mines  are  often  over-valued  because  the  valuation  is 
usually  done  by  people  who  are  interested  in  getting  a 
maximum  appraisement. 

There  is  another  far-reaching  factor;  mines  are  fre- 
quently bought  to  sell.  It  is  a  cynical  truth  that  more 
money  is  made  by  selling  mines  than  by  buying  them — 
because  they  are  so  often  sold  for  more  than  they  are 
worth.  Therefore  it  happens  that  although  a  property 
may  be  recognized  as  worth  a  stated  sum,  nevertheless 
shrewd  persons  will  be  willing  to  pay  a  larger  amount 
because  they  have  a  reasonable  expectation  of  selling 
it  subsequently  for  still  more.  If  this  is  brought  about  by 
further  intelligent  development,  by  solving  knotty  prob- 
lems of  ore  treatment,  by  a  new  equipment  which  minim- 
izes working  costs,  that  is,  by  engineering  talent  of  the 
best  kind,  then  assuredly  the  enhancement  in  price  is  both 


THE  VALUATION  OF  MINES  1 

warranted  and  deserved;  but  when  it  merely  presumes 
upon  the  ignorance  of  individuals  or  of  shareholders  it 
partakes  of  the  practices  which  slide  imperceptibly  into 
acts  that  are  dishonest. 

The  result  of  these  tendencies  is  that  it  is  hard  to  pur- 
chase mines  at  a  fair  valuation — that  is,  we  repeat,  a 
valuation  such  as  is  likely  to  give  a  return  of  the  pur- 
chase price,  plus  a  reasonable  interest  on  the  capital  in- 
vested. The  supply  of  good  mines  is  far  below  the  de- 
mand; in  addition  to  those  who  are  shrewd  enough  to 
recognize  that  gold  mining,  if  properly  safeguarded,  is 
the  safest  industry  extant,  there  are  a  larger  number  who 
see  the  advantage  of  trading  upon  the  sanguine  tempera- 
me.nt  of  human  kind,  and  there  is  also  another  class  of 
people  who  rush  in  where  experienced  men  fear  to  com- 
mit themselves.  Thus,  if  a  mine  is  worth  a  certain  sum, 
as  nearly  as  the  fact  can  be  determined  by  skillful  and 
trained  specialists,  then  the  first  group  described  will  pay 
that  much  for  it,  while  the  second  will  pay  more  accord- 
ing to  the  popularity  of  the  locality  and  the  attractive- 
ness of  the  scheme,  and  the  third  group,  of  innocents, 
will  be  deluded  into  parting  with  a  price  which,  humanly 
speaking,  promises  a  loss  with  deadly  certainty. 

These  are  some  of  the  reasons  why  mining  ventures 
prove  unprofitable;  they  are  such  as  time  alone  can  re- 
move— time  and  the  education  of  the  public  to  a  realiza- 
tion of  the  fact  that  while  no  industry  affords  such  rapid 
and  remunerative  returns  as  legitimate  mining,  none 
affords  so  readily  the  facilis  descensus  Averno  which 
awaits  the  greedy  or  the  foolish  in  the  financial  arena. 


ORE  SORTING 

(Editorial,    February    7,    1903.) 

The  article  on  ore  sorting  which  we  publish  in  this 
issue  deals  with  a  subject  of  very  practical  importance. 
Ignorance  concerning  the  proper  proportion  of  poor  rock 
which  it  is  desirable  to  take  out  of  the  veinstuff  has 
made  failures  of  good  enterprises,  and  the  overlooking 
of  this  factor  in  mining  has  been  at  the  bottom  of  many 
inexplicable  over-valuations  of  property.  Whether  to 
sort  or  not,  is  a  question  vital  to  the  economics  of  a 
mine;  it  may  mean  the  choice  between  a  small  yield  of 
high-grade  material  or  a  large  output  of  low-grade,  an 
alternative  which  immediately  affects  all  the  operations 
carried  on  at  the  surface,  as  well  as  underground.  In 
regard  to  estimates  of  the  future  production  of  a  mine,  it  is 
not  too  much  to  say  that  the  tonnage  taken  out  of  the 
workings  is  nearly  always  greater  than  that  calculated, 
because  it  is  found  by  experience  that  such  estimates, 
based  as  they  are  on  a  few  regular  stopes,  are  likely  to 
be  pitched  too  low  as  regards  tonnage  and  too  high  as 
regards  assay- values ;  therefore,  the  stoping  widths  which 
are  determined  by  actual  measurement  should  have  added 
to  them  an  allowance  for  breakages  of  rock  from  the 
walls  of  the  lode  and  the  accidental  inclusion  of  waste  in 
other  ways. 

The  best  place  to  do  your  sorting  is  at  the  working 
face,  if  you  can;  this  is  to  be  done,  either  by  judicious 
blasting,  which  removes  the  maximum  of  clean  ore  and 
the  minimum  of  wall-rock,  or  by  eliminating  the  large 
pieces  of  waste  which  are  always  serviceable  for  loading 
the  stulls.  All  sorting  at  surface  is  made  more  difficult 
by  the  mixing  which  the  particles  of  ore  and  waste  under- 
go in  subsequent  handling,  either  while  being  loaded  into 


ORE  SORTING  9 

the  cars  or  dumped  into  the  ore-house.  The  Cornishman 
who  'resues,'  that  is,  strips  the  lode  by  shooting  down 
the  adjoining  waste-rock  previous  to  breaking  down  his 
ore,  separately  and  clean,  presents  one  extreme  of  the 
methods  possible  underground ;  while  the  man  who  need- 
lessly blasts  a  narrow  and  clean  streak  of  high-grade  ore 
together  with  several  feet  of  adjoining  barren  country, 
only  to  give  employment  to  a  number  of  men  at  sur- 
face who  separate  what  could  have  been  kept  apart  in  the 
stope,  illustrates  the  other  extreme.  It  is  not  a  mathema- 
tical or  scientific  question,  and  on  that  account  it  is  insuf- 
ficiently appreciated,  but,  like  many  other  problems  aris- 
ing in  daily  work,  it  demands  that  fundamental  science 
which  Huxley  defined  as  organized  common  sense. 


SORTING  AT  JOHANNESBURG 

BY  T.  LANE  CARTER. 

(February    7,    1903-) 

The  question  of  raising  the  grade  of  the  ore  by  sorting 
out  the  barren  quartzite  is  one  that  has  received  great  at- 
tention on  the  Witwatersrand,  so  that  a  well-equipped  sort- 
ing house  is  now  looked  upon  as  one  of  the  necessary 
features  of  a  complete  plant.  Sorting  by  hand  is  the 
method  pursued,  it  being  out  of  the  question  to  use  such 
contrivances  as  jigs  for  this  purpose. 

Formerly,  the  waste  rock  was  considered  quite  barren, 
and  therefore  of  no  value.  A  different  opinion  prevails 
now.  It  has  been  the  custom,  of  course,  to  take  samples 
of  the  rock  which  is  thrown  out,  but  such  sampling  is 
almost  useless  for  practical  purposes.  It  is,  in  fact,  im- 
possible to  determine  in  the  ordinary  way  how  much  the 
waste  rock  is  worth,  for  it  consists  of  pieces  ranging  from 
the  size  of  an  egg  up  to  30  or  40  pounds.  One  method  is  to 
take  a  handful  from  each  carload  of  waste  before  it  is 
sent  to  the  dump,  and  throw  this  sample  into  a  box. 
When  the  box  is  full  the  man  in  charge  of  the  sorting 
plant  takes  a  sample  of  a  few  pounds  in  weight,  and  sends 
it  to  the  assay  office  to  be  assayed. 

Now,  it  is  curious  how  the  value  of  this  sample  varies, 
according  to  the  man  who  is  responsible  for  it.  It  is  pos- 
sible to  obtain  a  reliable  return  from  the  assayer  if  the 
rock  is  properly  crushed  and  quartered,  but  the  question 
is :  Does  this  sample  give  a  true  indication  of  the  value  of 
the  rock  which  goes  over  the  dump  ? 

The  only  possible  way  of  getting  at  the  value  of  the 
waste  is  to  crush  everything  to  a  uniform  small  size,  and 
then  quarter  down  carefully.  This  is  a  cumbersome  oper- 
ation, and  is  not  practicable.  The  writer  has  known  of 


SORTING  AT  JOHANNESBURG  11 

cases  where  an  assay  of  the  waste,  which  was  put  down 
as  4^  dwt.,  had  a  red  ink  line  drawn  through  it  by  those 
high  in  authority,  with  the  remark  that  "it  was  impossible 
for  the  rock  to  be  so  rich,"  and  that  "the  sample  must 
have  been  wrong."  But  it  is  just  possible  that  in  some 
cases  such  a  high  value  was  actually  in  the  rock.  On  one 
mine,  known  to  the  writer,  the  management  took  the  latter 
view,  and  let  out  a  contract  to  an  experienced  man  to  re- 
sort the  whole  dump.  The  contractor  was  given  about  $4 
per  ton  for  every  ton  of  clean  ore  he  picked  out,  and  it  was 
a  surprise  how  many  tons  of  pay-ore  were  obtained. 

A  rather  practical  test  is  being  tried  on  two  of  the  big 
mines  here.  No  attempt  is  made  to  sort  out  the  waste; 
everything  that  comes  from  the  mine  goes  to  the  mill,  ex- 
cept, of  course,  the  rock  from  cross-cuts.  The  value  per 
ton  crushed  has  fallen,  but  the  management  believes  that 
under  the  circumstances  more  profit  will  be  made  by  not 
sorting.  The  way  they  look  at  it  is  this :  A  calculation  is 
made  of  the  cost  of  handling  the  ore  after  leaving  the 
sorting  table ;  suppose  it  is  determined  that  having  mined 
and  hoisted  the  ore  and  brought  it  to  the  mill  it  pays  to 
crush  anything  over  1.9  dwt.,  and  the  waste-heap  goes 
2.\  dwt. ;  then  it  is  better  to  run  through  this  2\  dwt.  stuff, 
even  if  only  i  shilling  per  ton  profit  is  made,  rather  than 
hang  up  a  number  of  stamps  for  lack  of  ore. 

It  is  not  held  that  sorting  does  not  pay,  but  under  some 
conditions  it  might  be  preferable  not  to  sort.  Take,  for 
instance,  a  battery  of  200  stamps.  On  account  of  the 
scarcity  of  labor,  only  about  70  of  these  stamps  can  be 
supplied  with  sorted  ore  at  the  present  time.  Under  these 
conditions  it  is  advisable  to  put  through  every  ton  of 
material  on  which  even  a  small  profit  can  be  made. 

To  put  the  matter  in  a  nutshell,  the  managers  make 
profits  the  basis  of  calculation;  rather  than  yield  per  ton 
of  ore  crushed.  If  labor  were  plentiful,  and  a  mine  with 
200  stamps  had  a  superabundance  of  ore,  the  better  policy 


12  THE  ECONOMICS  OF  MINING 

would  be  to  raise  the  grade  as  much  as  possible,  even  if 
by  so  doing  the  dump  assayed  rather  high.  But  it  will  be 
many  months  before  a  mine  with  200  stamps  will  have  a 
superabundance  of  ore  for  the  mill. 

The  enthusiasts  on  sorting  look  rather  askance  at  aban- 
donment of  sorting,  but  it  is  an  experiment,  and  as  such 
is  interesting.  It  will  be  noticed  that  2^  dwt.  was  put 
down  as  the  value  of  the  waste  rock.  This  might  seem 
high",  but  on  some  mines  it  is  the  correct  value.  An  in- 
vestigation has  shown  the  cause  of  it.  The  quartzite  coun- 
try is  barren,  if  sampled  a  foot  from  the  reef  or  vein,  but 
sometimes  in  the  immediate  neighborhood  of  the  reefs 
careful  sampling  will  show  that  the  supposedly  barren 
rock  carries  gold,  assaying  in  one  case  as  high  as  i  oz.  per 
»  ton.  The  underground  manager  of  one  of  the  Rand 
mines  told  me  that  in  his  mine  there  was  a  tiny  pyrite 
seam,  some  distance  from  the  regular  leader,  which  as- 
sayed 5  oz.  to  the  ton.  In  the  ordinary  course  of  events 
this  country  rock  would  be  thrown  out. 

The  foregoing  must  not  be  taken  as  disparaging  the 
scheme  of  sorting,  for  there  is  no  doubt  that  sorting,  if 
carefully  watched,  and  done  by  skilled  men,  can  play  a 
still  greater  part  in  the  future  of  the  Rand  than  it  has 
done  in  the  past.  Like  everything  else,  however,  it  needs 
careful  watching ;  if  it  is  not  done  properly,  an  actual  loss 
might  be  the  result,  as  has  been  already  indicated. 

In  the  future  it  is  possible  that  better  sorters  than 
Kaffirs  will  be  employed.  An  earnest  attempt  will  be 
made  to  get  at  the  actual  value  of  the  waste  rock,  either 
by  occasional  trials  in  the  mill  or  by  careful  sampling. 

On  some  mines  an  attempt  at  rough  sorting  is  made 
underground,  the  larger  pieces  of  waste  being  put  in  pack 
walls.  In  the  sorting  houses  one  of  two  schemes  is 
adopted.  Either  an  endless  belt,  such  as  the  Robins  belt- 
conveyor,  moves  past  the  sorters,  who  throw  out  the 
waste,  or  a  revolving  table,  ring-shaped,  about  35  to  40  ft. 


SORTING  AT  JOHANNESBURG  13 

in  diameter,  with  a  periphery  5^  to  6  ft.  wide.  The  sort- 
ers throw  the  waste  into  bins  below  the  table.  Water  for 
washing  the  ore  is,  of  course,  used  plentifully. 

It  may  be  of  interest  to  give  an  example  of  how  the 
question  of  sorting  affects  the  valuation  of  a  block  of  ore 
in  the  mine.    Suppose  we  have  a  block  of  ground  300  ft. 
long  by  120  ft.  on  the  dip  of  the  reef.     It  is  desired  to 
form  an  estimate  of  the  number  of  tons,  and  the  value 
per  ton  in  this  block.  The  assay-plan  is  spread  out  and  the 
assays  taken,  as  they  are  marked,  all  around  the  perime- 
ter of  the  block.    On  the  assay-plans  of  many  mines  the 
assay  value  of  the  seams  of  gold-bearing  material  and  the 
width  in  inches  are  bracketed  thus : 
15  in.  at  19  dwt. 
4  in.  at  75  dwt. 
All  these  values  are  taken  down  and  the  average  found. 

Suppose  the  result  comes  out  thus : 
20  in.  at  10  dwt. 

6  in.  at  90  dwt., 

which  we  call  26  in.  at  28  dwt.,  the  average  value  of  the 
block. 

The  stoping  width  can,  for  example,  be  assumed  as  42 
in.  Since  we  have  26  in.  at  28  dwt.,  then  for  a  width  of 
42  in.  we  have  42  in.  at  17.3  dwt.  To  find  the  number  of 
tons  in  the  block 

300  X  120  X  3  c 

-  =9,692  tons ;  9,692  X  17.3=  167,671  dwt., 

the  gold  contents  of  the  block.* 

We  will  assume  that  35  per  cent  of  the  ore  will  be 
broken  as  unsortable  fines,  and  that  20  per  cent  will  be 
sorted  out.  The  block  can  then  be  valued  as  follows : 

dwt.  dwt. 

3,392  tons  fines    at  17-3    =    58,685     (i) 

1,938  tons  of  waste  rock    at 1.5    =      2,907     (2) 

4,362  tons  of  sorted  rock    at 24.2    =  106,079     (3) 

9,692   tons. —  167,671 

*  The  figure  13  is  assumed  as  the  number  of  cubic   feet  of  ore  in  place 
equivalent  to  one  ton. — Editor. 


14  THE  ECONOMICS  OF  MINING 

By  combining  (i)  and  (3)  we  can  reckon  that  from 
this  block  of  ground  there  will  be  sent  to  the  mill  7,754 
tons  at  21.2  dwt. 

Notice  that  the  waste  rock  is  not  considered  barren, 
but  is  put  down  at  ij  dwt.,  which  is  a  normal  value. 


COST  OF  SHAFT  SINKING  BY  HAND 

(February  28,   1903.) 

Mr.  Edward  H.  Benjamin  contributes  to  the  Pacific 
Coast  Miner  an  interesting  statement  regarding  the  cost 
of  shaft  sinking  by  hand  in  California.  The  table  below 
gives  the  record  of  work  in  the  last  150  ft.  of  the  vertical 
shaft  at  the  Golden  Eagle  mine,  Lassen  County,  Cal. — 
the  property  of  the  Lassen  Mining  Company. 

Wages  or  Cost 

Shifts.  Price.  Totals.  per  ft. 

Miners   (9) 423  $3.00  p'r  s'ft  $1,269.00  $8.460 

Topmen    (2) 94  2.50  p'r  s'ft.  235.00  1.566 

Engineers    (2) 94  3.00  p'r  s'ft.  282.00  1.880 

Blacksmith    (i) 47  3.50  p'r  s'ft.  164.50  1.006 

Foreman   (i) 47  loop'rmo.  172.30  1.149 

Total  labor 705  $2,122.80  $14.151 

Quantity. 

Timber  10,976  ft.  $13  per  M.  $142.69  $0.951 

Lagging    2,520  ft.    350.  a  piece  88.20  0.588 

Lining  boards 2,270  ft.  $14  per  M.  31.78  0.212 

Cordwood    (blocking)....  5  cords  $3  per  cord  15.00  o.ioo 

Wedges    3,ooo        ic.  a  pieqe  30.00  0.200 

Total  timber $307.67    $2.051 

Wood   (fuel) 25  cords  $3  per  cord        $75.oo    $0.500 

Oil  and  incidentals 15.00      o.ioo 

Total  power  cost $90.00    $0.600 

Coal  oil 6  cases  $4.15  case  $24.90    $0.560 

Candles    6  cases  $6.40  case  38.40      0.256 

Total  illumination $63.30  $0.422 

Powder  . : 600  Ib.  I4c.  per  Ib.  $84.00  $0.560 

Fuse   2,500  ft.    $3.70  per  M.  9.25  0.061 

Caps   550              6.25  per  M.  3.44  0.023 

Total  explosives $96.69    $0.644 

Total  cost  of  150  feet  of  shaft $2,680.46  $17.868 

Mr.  Benjamin  adds  the  following  details :  "Work  was 
commenced  at  a  point  7  ft.  below  the  400  level  and  the 
shaft  was  sunk  150  ft.  below  that  point.  The  work  was 


16  THE  ECONOMICS  OF  MINING 

done  by  hand  drilling,  working  three  8-hour  shifts, 
with  three  men  on  a  shift.  The  ground  was  taken  out 
7  by  12  ft.  in  the  clear — for  a  double-compartment  shaft. 
Hoisting  was  done  with  a  bucket.  The  country  rock  was 
hard  andesite.  No  water  was  encountered.  The  shaft 
was  timbered  with  10  by  loin,  sawed  timbers,  end-plates 
and  centre-braces  dovetailed  in,  and  centre  and  corner 
posts  gained  in.  The  sets  were  placed  5  ft.  between  cen- 
tres, rilled  and  lagged  solid  behind  timbers  and  each  com- 
partment was  lined  with  I  by  12-in.  lining  boards  set  3 
in.  apart.  The  work  was  completed  in  47  shifts,  making 
an  average  of  3.2  ft.  per  shift,  hoisting  20  tons  of  material 
per  shift,  besides  putting  in  timbers.  The  timbers  were 
framed  by  hand  by  the  foreman,  who  directed  the  work. 
Eighteen  holes  were  drilled  for  each  round.  No.  2  Giant 
powder  was  used.  The  ground  drilled  hard,  but  broke 
well.  The  outside  holes  were  kept  high  and  the  centre 
broke  first.  I  do  not  know  of  any  work  done  by  hand 
where  a  better  record  has  been  made." 


GOLD  MINING  AS  AN   INVESTMENT 

(Editorial,    March  21,    1903.) 

We  note  that  our  London  contemporary,  The  Econo- 
mist, which  represents  the  best  traditions  of  financial 
journalism,  has  finished  the  publication  of  a  series  of 
articles  by  its  "Special  Mining  Commissioner,"  under 
which  title  we  have  easily  recognized  the  trenchant  style 
and  fearless  expression  of  opinions  which  characterize 
our  friend,  Mr.  J.  H.  Curie.  The  concluding  article  of  this 
series,  an  abstract  of  which  will  be  found  on  another 
page,  winds  up  with  a  few  home  truths  and  that  under- 
current of  depressing  frankness  which  we  have  learned 
to  associate  with  Mr.  Curie's  writings. 

The  burden  of  these  recent  contributions  to  the  pages 
of  The  Economist  has  been :  Gold  mines  are,  with  'rare 
exceptions,  much  overvalued;  shareholders  do  not  realize 
the  risk  and  are  satisfied  with  a  rate  of  interest  which 
is  too  small,  considering  that  risk;  they  are  careless  re- 
garding questions  of  ore  reserves;  they  end  inevitably 
by  over-rating  their  mines  and,  in  consequence,  they 
speculate  foolishly.  As  a  corollary,  it  is  suggested  by 
Mr.  Curie  that  a  certain  rate  of  dividend,  a  certain  pro- 
portion of  ore  reserves  and  a  healthy  condition  of  de- 
velopment are  essential  to  any  mining  enterprise  which 
is  to  be  regarded  as  an  investment. 

While  we  appreciate  the  service  done  to  the  public 
and,  no  less,  to  the  industry  by  advice  of  this  kind,  we 
consider  that  it  tells  only  half  the  story,  and  is  calculated 
to  create  a  wrong  impression  concerning  gold  mining. 

Legitimate  gold  mining  is  not  necessarily  an  invest- 
ment, nor  indeed  does  even  so  conservative  an  industry 
as  farming  come  always  under  this  label.  There  are 
types  in  both  industries  which  proceed  along  such  well 


18  THE  ECONOMICS  OF  MINING 

ordered  lines  and  with  such  consecutive  regularity  of 
production  that  their  earning  capacity  can  be  safely  pre- 
dicted; but  each  exhibits  variations  of  procedure  which 
are  both  profitable  and  risky  in  a  proportionate  degree. 
In  this  country  gold  mining  is  not  ranked  with  railroad 
bonds,  save  by  the  unthinking.  It  is  true  that  there  are 
a  few  properties  which  have  become  developed  to  such 
an  extent  that,  like  the  mines  on  the  Rand,  they  are, 
humanly  speaking,  certain  to  return  a  stated  sum  in 
capital  plus  a  definite  interest  during  the  period  of  ex- 
traction, but  they  are  so  few  that  the  fingers  of  a  man's 
hand  suffice  to  count  those  which  he  can  quote  im- 
promptu. The  moneyed  man  who  goes  into  mining  to 
make  more  money  knows  this.  He  does  not  expect  to 
find  a  Homestake  or  an  Alaska-Treadwell,  and  if  you 
cross-examine  him  you  will  probably  discover  that  he 
does  not  want  that  type  of  mine  so  much  as  he  seeks  for 
a  Little  Pittsburg,  a  Chrysolite,  a  Yankee  Girl,  a  Granite 
Mountain,  an  Independence,  a  Tonopah — that  is,  the 
superlatively  rich  ore  deposit  which  makes  as  much 
money  in  a  month  as  the  steady  producer  earns  in  five 
years.  In  other  words,  the  speculative  side  of  mining 
has  an  attractiveness  which  is  at  the  bottom  of  the 
energy  with  which  it  is  prosecuted,  and  when  you  bring 
it  to  the  dead  level  of  a  steady  investment  you  will  find 
that  the  man  of  ordinary  shrewdness  will  save  time  by 
going  straight  to  his  broker  and  buying  bonds  or  con- 
sols. 

The  Rand — presenting  an  unsual  type  of  gold  min- 
ing, minimizing  risks  and  at  the  same  time  limiting  pos- 
sibilities— has  run  away  with  our  cautious  advisor.  Ordi- 
nary gold  mining  can  never  come  to  a  strictly  investment 
basis;  from  the  time  of  the  Argonauts  to  that  of  Cape 
Nome  it  has  been,  and  will  continue  to  be,  an  adventur- 
ous pursuit,  attractive  to  the  bold  and  avoided  by  the 
timorous.  ' 


GOLD  MINING  AS  AN  INVESTMENT       19 

Strike  out  the  mines  which  are  not  sound  investments 
from  the  undertakings  into  which  a  sensible  man  should 
put  his  money,  and  you  shrivel  legitimate  mining  into  a 
dry  business,  which  would  soon  wither  from  want  of  life. 
Before  the  investment  basis  is  reached,  the  best  mining 
undertaking  must  as  surely  pass  through  several  stages 
of  comparative  speculativeness  as  a  child  must  run  the 
dangers  of  measles  and  mumps.  The  biggest  fortunes 
are  made  during  the  earlier  stages  of  development;  more 
money  is  made  by  selling  than  by  buying  mines,  simply 
because  the  final  or  investment  stage  of  a  first-class  mine 
brings  less  profit,  while  it  never  can  quite  eliminate  the 
essential  hazard. 

Mining  undertakings  come  to  grief  so  often,  not  so 
much  on  account  of  failure  to  attain  an  investment  basis, 
but  because  they  are  not  put  on  a  business  basis.  People 
play  the  fool  and  expect  miracles  to  happen.  The  same 
procedure  would  ruin  a  grocery  establishment.  Because 
the  occurrence  of  ore  in  nature  is  uncertain,  and  mining 
as  a  consequence  must  necessarily  be  speculative,  there 
is  no  reason  for  piling  human  foolishness  on  the  top  of 
nature's  niggardliness.  Of  well-conducted  mining  enter- 
prises it  can  be  said  that  they  meet  with  a  percentage  of 
success  as  large,  if  not  larger,  than  any  ordinary  manu- 
facturing undertaking.  The  smashes  are  more  spectacu- 
lar and  the  successes  are  more  magnificent  in  the  former 
case,  but  the  average  result  does  not,  as  a  rule,  favor 
the  apparently  safer  form  of  industry.  We  are  glad  to 
be  able  to  believe,  with  The  Economist,  that  mining  meth- 
ods are  becoming  more  sane;  and  we  recognize  that  this 
consummation  is  quickened  by  the  good  sense  contained 
in  such  contributions  as  those  to  which  we  have  been 
referring. 


MINING  RISKS 

(Editorial,   April    4,    1903.) 

Actuarial  calculations  have  been  successfully  adopted  in 
estimating  the  value  of  the  mines  on  the  Rand.  Such  a 
method  of  appraising  mining  property  may  not  be  applica- 
ble to  the  palpitating  uncertainties  of  ordinary  gold  veins, 
which,  while  they  miss  the  comparative  uniformity  of  the 
great  Main  Reef  series,  yet  possess  possibilities  of  bonan- 
zas, the  like  of  which  are  unknown  at  Johannesburg. 
Nevertheless,  the  introduction  of  the  actuary  into  the 
proverbial  uncertainties  of  mining  would  have  seemed  a 
curious  departure  twenty  years  ago,  and  it  carries  with  it 
a  certain  suggestiveness  which  can  be  expressed  by 
simile. 

Mines  are  comparable  to  humanity.  The  new  discov- 
ery of  a  prospector  is  like  an  infant,  born  to-day,  which 
may  die  to-morrow,  leaving  no  record,  not  even  a  name. 
A  prospect  resembles  a  young  child,  rich  in  possibilities, 
but  hedged  around  with  all  the  uncertainties  of  imma- 
turity. The  promising  prospect  may  succumb  to  the 
measles  of  bad  management,  or  the  whooping-cough  of 
inexperience.  In  spite  of  care  and  equipment  neither 
child  nor  prospect  may  survive  long  enough  to  make  a 
mark,  or,  on  the  other  hand,  they  may  outlive  the  dangers 
of  adolescence  and,  by  reason  of  inherent  quality,  they 
may  develop  into  a  mine  and  a  man  which  outdistance  the 
expectations  of  their  best  friends.  Again,  a  child  grows 
to  manhood ;  a  prospect  develops  into  a  mine.  The  young 
man  reaches  the  threshold  of  a  career  full  of  promise  and 
distinction,  or,  he  already  manifests  the  evidence  of  an  early 
decadence  of  great  natural  powers;  so,  too,  the  prospect, 
having  passed  through  the  changes  of  early  development, 
may  afford  proof  of  opening  up  into  a  property  of  im- 


MINING  RISKS  21 

portance,  or,  on  the  contrary,  it  may  have  been  deep- 
ened to  the  water  level  only  to  disclose  the  fact  that  either 
the  sulphide  ores  are  less  rich  than  the  oxidized  product 
near  the  surface,  or  that  the  material,  hitherto  docile  to 
simple  milling,  has  become  too  refractory  for  profitable 
treatment.  Another  stage  of  development  brings  the 
man  to  full  maturity,  with  a  past  of  fair  achievement  and 
a  future  of  continued  usefulness,  or  it  may  exhibit  the  ex- 
hausted energies  of  a  waning  career ;  similarly,  the  mine, 
having  achieved  celebrity  by  means  of  a  prolific  output, 
gives  assurance  of  continued  productiveness,  or,  it  may 
be,  already  shows  signs  of  approaching  impoverishment.. 
Finally,  both  become  old,  the  man  and  the  mine;  andr 
whether  it  be  long  in  years  or  deep  in  feet,  we  predict 
with  certainty  the  eventual  exhaustion  of  splendid  powers. 
Men  think  all  men  mortal  but  themselves ;  they  also  realize 
that  all  mines  must  give  out  at  last — all  save  their  own. 
Thus  does  the  melancholy  actuary  drive  home  his  sad 
philosophy, 


MINING    METHODS    AT   JOHANNESBURG 

BY  T.  LANE  CARTER. 

(April   18,    1903.) 

The  greatest  expenditure  of  labor  in  the  mines  of  the 
Rand  is  in  getting  the  rock  from  the  stopes  to  the  cars 
at  the  level.  The  amount  of  work  required  to  shovel  a 
ton  of  rock  from  a  stope  into  the  cars  depends  upon  the 
conditions  obtaining  in  different  mines.  The  outcrop 
gold  mines,  where  the  dip  is  as  great  as  70°,  have  a  great 
advantage  over  the  deep-level  companies,  where  the 
stopes  frequently  flatten  out  to  25°.  This  flattening,  taken 
with  the  broken  foot-wall,  makes  it  necessary  to  shovel, 
over  and  over  again,  every  bit  of  rock,  before  it  finally 
gets  into  the  car. 

In  the  deep-level  mines,  a  good  many  incline-planes 
have  been  installed  in  the  flat  stopes,  so  as  to  facilitate 
the  handling  of  the  ore.  The  cars  are  loaded  at  any  point 
in  the  stope,  and  are  then  lowered  to  the  level  below. 
They  are  then  detached  from  the  rope  and  pushed  to  the 
chute  at  the  landing  station,  where  the  rock  is  dumped. 
The  installation  of  an  incline-plane  is  'by  no  means  as 
easy  as  the  same  undertaking  would  be  in  a  coal  mine. 
The  road-bed  has  to  be  blasted  out,  and  the  whole  con- 
trivance must  be  protected  against  violent  blasting.  How- 
ever, so  much  shoveling  is  saved  by  instituting  these 
contrivances  that  it  pays  to  put  them  in  most  stopes  of 
25°,  in  spite  of  the  initial  heavy  cost.  In  these  days  of 
labor  scarcity  it  is  doubly  imperative. 

It  may  be  of  interest,  seeing  that  so  much  has  been 
said  lately  concerning  labor  conditions,  to  mention  the 
methods  of  managing  the  workmen.  Since  the  skilled 
white  man  receives  so  high  a  rate  of  wage,  it  is  necessary 
to  get  as  much  work  out  of  him  as  possible.  Most  of 


MINING  METHODS  AT  JOHANNESBURG  23 

the  work  underground  is  done  by  the  contract  system, 
although  a  few  of  the  leading  mines  operate  entirely  on 
"day's  pay,"  and  seem  satisfied  with  their  results.  When 
the  day's  pay  system  is  in  vogue,  the  character  of  under- 
ground operations  depends,  to  a  large  extent,  on  the 
mine  captain  and  the  shift  bosses.  If  they  are  inferior 
or  inactive  men,  the  amount  of  loafing  which  goes  on  is 
surprising.  If,  however,  a  mine  is  fortunate  enough  to 
have  a  thoroughly  capable  mine  captain,  who  has,  the 
gift  of  managing  men,  and  the  shift  bosses  under  him 
are  also  alert,  the  day's-pay  system  makes  a  very  good 
showing. 

The  contract  system,  however,  seems  the  better  of  the 
two.  The  company  never  appears  to  lose  by  it,  although 
some  of  the  miners  receive  nearly  twice  as  big  wages 
as  they  would  at  day's  pay.  One  advantage  arises  from 
the  fact  that  the  mine  employing  the  contract  system  at- 
tracts the  best  workmen,  who  realize  that  by  this  method 
they  are  thrown  entirely  on  their  own  resources,  with  the 
chance  of  earning  big  wages,  if  they  work  both  with  their 
hands  and  their  heads. 

The  modifications  of  the  contract  system  are  of  prac- 
tical importance.  Some  managers,  for  instance,  employ 
it  throughout  the  mine,  except,  of  course,  for  timbermen, 
trackmen,  pumpmen,  etc.  In  such  a  case  every  piece  of 
rock  is  broken  by  contract.  Then  there  are  mines  using 
a  combination  of  day's  pay  and  the  contract  system ;  those, 
for  instance,  which  are  traversed  by  dikes  and  broken 
country,  rendering  it  difficult  to  work  the  ground  on 
contract. 

There  is,  of  course,  a  limit  to  the  amount  a  contractor 
is  allowed  to  make,  and  this  limit  varies  in  different 
mines,  and  at  different  periods  in  the  history  of  the  same 
mine.  Before  milling  operations  commence,  for  instance, 
when  there  is  great  eagerness  to  push  the  development  in 
all  directions  as  rapidly  as  possible,  the  contractor  is 


24  THE  ECONOMICS  OF  MINING 

allowed  to  make  a  handsome  sum,  month  after  month, 
without  fear  of  a  cut.  On  one  big  mine  here,  before  the 
war,  a  thoroughly  competent  miner  could  make  from 
$375  to  $500  per  month  during  the  development  stage, 
but  when  the  mill  commenced  operations  this  fell  a  great 
deal,  so  that  on  this  property  $250  per  month  is  now 
about  the  high-water  mark. 

Even  after  the  mill  starts  crushing  it  is  considered  no 
more  than  fair  that  contractors  in  drifts  and  shafts  should 
be  paid  higher  than  men  engaged  in  stoping. 

It  requires  considerable  skill  and  experience  to  manage 
the  contractors  to  the  best  advantage.  The  mine  captain 
should  be  an  expert  judge  of  ground,  and  be  careful  to 
have  the  price  neither  too  high  nor  too  low.  He  must 
be  just.  The  writer  once  worked  with  a  contractor  in  a 
drive.  It  was  noticed  that  for  three  weeks  in  the  month 
he  worked  like  a  Trojan,  but  did  very  little  in  the  latter 
part  of  the  month.  Upon  being  pressed  for  an  explana- 
tion, it  was  found  that  he  calculated  he  would  be  out  if 
he  worked  strenuously  all  the  month,  so  he  took  it  easy 
after  being  sure  he  had  done  enough  to  get  a  good  wage. 
In  this  case  the  price  was  evidently  too  high.  Nor 
should  the  price  be  too  low,  for  if  too  great  a  cut  is  made 
an  efficient  man  is  liable  to  leave  for  another  mine,  where 
he  can  make  more  money.  One  basis  of  calculation  is 
that  a  contractor  who  works  hard  every  day,  and  man- 
ages to  drill  40  to  45  ft.  a  day,  and  to  blast  successfully 
all  the  holes,  should  be  allowed  to  make  about  $250  per 
month.  With  such  terms  a  man  must  work  diligently. 
If  he  neglects  his  work,  or  is  not  intelligent  about  it,  he 
runs  the  risk  of  being  in  debt  at  the  end  of  the  month. 
There  are  times,  however,  when  the  mine  captain  recom- 
mends that  the  pay  of  a  contractor  who  has  done  poorly 
be  brought  up  to  day's  pay,  and  in  such  cases  the  man 
receives  more  than  he  has  really  earned.  Discretion  has 
to  be  used,  for  if  the  contractor  thinks  he  is  always  sure 


MINING  METHODS  AT  JOHANNESBURG  25 

of  at  least  day's  pay  he  is  apt  to  hang  back  with  his 
work. 

In  stope  contracts  the  usual  method  is  to  pay  so  much 
per  square  fathom.  I  do  not  know  of  any  mines  here 
where  the  method  of  paying  so  much  per  ton  broken  is 
employed.  In  mines  that  are  run  on  the  contract  sys- 
tem, much  of  the  responsibility  is  taken  from  the  shoul- 
ders of  the  mine  captain  and  put  upon  the  survey  depart- 
ment, which  is  responsible  for  the  measuring  of  the 
ground.  This  is  not  the  place  to  enter  into  a  discussion 
of  stope  measuring,  but  I  trust  I  shall  be  able  to  write 
a  description  of  the  methods  used  at  some  future  date. 
The  prices  paid  for  stoping  vary,  of  course,  in  the  differ- 
ent parts  of  the  mine,  and  depend  upon  the  character 
of  the  rock,  whether  the  stope  is  underhand  or  overhand 
The  biggest  range  I  know  of,  in  any  one  mine,  is  from 
$14.50  to  $17.50  per  square  fathom.  In  other  proper- 
ties these  prices  differ,  although  there  is  probably  not 
a  stope  in  the  district,  at  least  in  the  deep  level  mines, 
that  is  being  worked  for  less  than  $12.50  per  square 
fathom.  On  the  average  $16  can  be  considered  the 
prevailing  price  along  the  Rand,  at  the  present  time. 
Contractors  are  provided  with  Kaffir  labor,  for  which 
they  pay  75c.  per  day  per  man.  They  are  charged 
for  the  stores  they  use,  such  as  dynamite,  fuse,  candles, 
etc.,  and  at  some  properties  they  even  pay  for  the  sharp- 
ening of  the  drills. 

What  is  a  good  month's  work  for  a  contractor?  The 
number  of  square  fathoms  stoped  out  with  two  air  drills 
(and  it  is  almost  the  universal  practice  for  each  contractor 
to  run  two  drills  except  in  the  drifts)  varies  as  much  as 
the  prices  paid  per  square  fathom.  From  28  to  46  square 
fathoms  gives  ^an  idea  of  the  range.  About  36  square 
fathoms,  with  two  machines  working  a  single  shift,  may 
be  considered  good  work.  The  stopes  average  4.75  ft.  in 
width.  In  drifting  there  is  considerable  variation  also. 


26  '  THE  ECONOMICS  OF  MINING 

In  some  drifts  a  round  of  twelve  5i~ft.  holes  is  made, 
while  others  require  16  holes.  A  man  working  with  one 
machine  in  unfavorable  ground,  one  shift  per  day,  is 
doing  good  work  if  he  makes  40  ft.  per  month.  Under 
favorable  conditions  he  may  manage  50  ft.  per  month. 
The  prices  for  drifting  vary  from  $9  to  $10.50  per  foot. 

Owing  to  the  scarcity  of  cheap  labor  there  are  few 
stopes  being  worked  by  hand-drillers.  It  would  be  advan- 
tageous in  most  stopes  to  substitute  drilling  by  hand  for 
machines,  and  whenever  it  is  possible  it  is  done.  A  white 
miner  is  given  charge  of  a  number  of  Kaffirs,  30  to  40, 
and  works  the  stope  on  contract. 

The  contract  system,  which  I  have  tried  to  describe, 
is  certainly  not  the  doctrine  of  trades-unionism,  which 
preaches  that  every  man  doing  the  same  class  of  work 
should  receive  the  same  wages  per  day.  But  there  is  a 
certain  amount  of  trades-union  feeling  even  among  the 
contractors.  It  is  generally  understood  that  a  day's  work 
consists  of  putting  in  4  holes,  5^  ft.  deep,  per  machine. 
When  the  men  are  on  contract  they  stick  to  this  stand- 
ard, and  only  in  a  few  cases  do  they  try  to  drill  more 
than  four  holes  for  each  machine.  It  has  often  been  tried 
to  persuade  them  to  drill  more,  but  they  argue  in  the  usual 
way,  and  do  not  change.  What,  then,  is  the  advantage  of 
using  the  contract  system,  if  the  men  do  not  drill  more 
holes  than  they  would  on  the  day's  pay?  In  the  first 
place,  the  men  use  their  heads  more.  To  see  the  care 
with  which  a  successful  contractor  pitches  his  holes,  so  as 
to  break  the  maximum  amount  of  rock,  makes  one  realize 
the  difference  between  a  contractor  and  a  wage  miner. 
Then,  too,  the  contractor  is  much  more  careful  with  his 
stores,  dynamite,  candles,  etc.,  and  waste  is  thus  reduced 
to  a  minimum.  And  again,  the  contractor  does  not  loaf. 
He  attends  strictly  to  business. 

Many  a  manager  has  been  surprised  to  find  how  early 
some  of  the  contractors  finish  their  drilling  for  the  day. 


MINING  METHODS  AT  JOHANNESBURG  27 

It  is  not  an  unfrequent  occurrence  to  find  a  contractor, 
making  good  pay,  finish  drilling  operations  by  2.30  o'clock 
every  day.  Blasting  is  not  allowed  before  5  o'clock,  and 
except  the  preparation  of  the  charges,  the  contractor  does 
nothing  from  2.30  until  blasting  time.  It  is  natural  that 
a  manager  should  try  to  devise  a  scheme  whereby  the 
company  may  get  the  advantage  of  these  idle  hours.  At 
first  the  men  were  asked  to  drill  an  extra  hole,  whenever 
possible,  the  promise  being  given  that  the  rate  per  square 
fathom  stoped  should  not  be  reduced.  They  fought  shy 
of  the  scheme,  and  preferred  to  make  less,  rather  than 
overstep  the  bounds  of  the  recognized  day's  work.  Then 
the  scheme  was  tried,  and  is  still  being  tried  on  a  small 
scale,  of  paying  the  contractors  so  much  per  foot 
drilled,  in  order  that  each  man  may  drill  the  maximum 
number  of  feet  per  shift.  By  this  arrangement  the  con- 
tractor is  used  as  a  driller.  If  the  plan  works  well,  no 
doubt  regular  blasters  will  be  employed,  the  contractor 
having  nothing  to  do  with  the  blasting  operations.  This 
method  of  working  contracts  seems  to  have  met  with  con- 
siderable success  in  other  parts  of  the  world.  So  far  little 
success  has  attended  it  here.  In  the  first  place,  by  adopt- 
ing this  arrangement,  the  responsibility  for  the  contracts 
is  shifted  from  the  survey  department  to  the  shift  bosses, 
and  this  is  undesirable.  Then,  again,  the  miners  oppose 
the  scheme  as  being  an  innovation.  It  looks  as  if  in  the 
future,  as  in  the  past,  the  general  way  of  carrying  on 
contracts  in  the  Witwatersrand  gold  mines  will  be  on  the 
basis  of  area  stoped  out,  without  any  reference  to  the 
amount  of  drilling,  or  the  thickness  of  the  stopes. 


NOTES  ON  ZINC  MINING 

BY  W.  GEO.  WARING. 

(July  4,    1903.) 

Valuation  of  Zinc  Ores. — The  value  of  any  zinc  ore 
depends,  ( I )  upon  its  percentage  content  of  metallic  zinc ; 
(2)  upon  whether  the  residuum  left  after  smelting  for 
spelter  or  for  zinc  oxide  can  be  profitably  treated  for  gold, 
silver  or  copper,  or,  as  in  the  case  of  franklinite,  for  man- 
ganese; (3)  upon  its  percentage  content  of  deleterious 
elements  which  either  deteriorate  the  product  or  increase 
the  expense  of  reduction.  Thus,  lead  and  iron  in  con- 
siderable amount  detract  from  the  value  of  ore  for  the 
latter  reason.  Zinc-blende  is  deducted  as  an  objectionable 
element  in  calamine  ores,  and  calamine  when  found  in 
blende  ore  is  not  paid  for.  Cadmium  is  deleterious  for 
certain  purposes,  also  antimony  and  arsenic.  Sulphur, 
which  composes  about  one-third  of  the  weight  of  pure 
'jack'  or  zinc-blende,  is  not  considered  as  an  element  of 
value,  because  the  cost  of  converting  it  into  sulphuric  acid 
(a  necessity  at  some  works)  leaves  little,  if  any,  profit. 

The  price  paid  to  the  ore  producer  per  unit  of  metal 
(a  unit  here  meaning  20  Ib.  or  i  per  cent  of  2,000  lb.), 
therefore,  varies  with  the  quality  of  the  ore.  Thus  in 
Missouri,  where  the  "assay  basis"  is  $30  per  ton  for 
blende  concentrate  containing  60  per  cent  metallic  zinc, 
concentrates  containing  only  20  per  cent  zinc  are  abso- 
lutely unmarketable;  when  they  contain  40  per  cent  zinc 
with  little  or  no  iron  they  are  worth  25c.  per  unit  of  metal, 
or  $10  per  ton ;  with  60  per  cent  zinc  the  unit  price  is  5oc., 
and  when  they  assay  64  per  cent  zinc  the  value  per  unit  is 
53|c.,  or  $34  per  ton. 

It  follows  that  the  miner  who  fails  to  clean  his  zinc  ore 
up  to  the  economic  limit,  which  for  zinc-blende  ore  is  held 


NOTES  ON  ZINC  MINING  29 

to  mean  that  from  2  to  6  per  cent  of  sand  or  earthy  matter 
may  remain  in  the  concentrate,  is  throwing  away  value 
when  he  sells  the  insufficiently  cleaned  material.  For  ex- 
ample, i  ton  of  the  40  per  cent  ore  above  cited  is  worth 
but  $10;  if  it  can  be  cleaned  to  assay  60  per  cent,  even 
allowing  a  reasonable  waste  of  10  per  cent  in  the  opera- 
tion, it  will  produce  1,200  Ib.  of  60  per  cent  ore,  worth 
$18,  a  gain  of  $8.  If  cleaned  to  assay  64  per  cent,  the 
product  would  weigh  1,125  tt>.,  and  would  be  worth 
$19.12. 

The  only  fair  and  equitable  method  yet  discovered  for 
ascertaining  the  value  of  any  metallic  ore  is  by  assay. 
Buyer  and  seller  are  alike  protected  by  this  means,  even 
against  direct  fraud,  provided  the  usual  precautions  are 
taken.  These  precautions  are  :  ( i )  That  the  sampling  be 
thoroughly  done  as  the  ore  is  delivered,  and  in  the  pres- 
ence of  both  buyer  and  seller  or  their  responsible  agents ; 
(2)  that  an  umpire  sample  be  sealed  at  the  time  of  sam- 
pling; (3)  that  the  percentage  of  moisture  in  the  ore  as 
delivered  be  ascertained  immediately  after  the  weight  is 
determined.  The  last  proviso  is  necessary  because  the 
assay  can  only  be  made  upon  the  dried  sample,  and  there- 
fore represents  the  percentage  content  of  the  ore  minus  its 
moisture.  Obviously,  in  settling,  it  is  immaterial  whether 
the  deduction  for  moisture  be  applied  to  the  gross  weight 
of  the  ore,  or  to  the  price  to  be  paid  per  ton,  or  to  the 
product  of  the  weight  by  the  price  per  ton,  but  it  cannot 
be  applied  to  reduce  the  assay  value. 

Weight  and  Volume  of  Zinc  Concentrate. — The  dry 
weight  of  a  bin  of  ore  or  concentrate  may  be  estimated 
very  closely,  if  the  space  occupied  by  the  ore  be  meas- 
ured and  the  weight  of  the  ore  per  cubic  foot  is  known. 

The  following  data  relative  to  the  specific  gravity  and 
weight  per  cubic  foot  of  zinc-blende  concentrates  and  two 
or  three  other  common  constituents  of  Missouri  and 
Kentucky  zinc  ores,  were  obtained  from  careful  tests 


30  THE  ECONOMICS  OF  MINING 

made  in  the  laboratory  of  Waring  &  Son,  at  Webb  City, 
Mo.,  and  are  now  for  the  first  time  made  public. 

The  minerals  tested  were  pure  massive  blende  from 
Prosperity,  Mo.,  containing  66  per  cent  zinc,  with  about 
I  per  cent  of  sulphides  of  cadmium,  copper  and  iron,  and 
having  a  specific  gravity  of  4.05  ;  marcasite  (cockscomb 
pyrite)  from  the  same  place;  galena  from  Webb  City, 
Mo. ;  clean  flint  from  the  same  place,  and  average  fluor- 
spar from  Livingston  county,  Ky.  The  samples  were 
crushed  to  5-mm.  size  (1-5  in.)  and  finer,  then  assorted 
by  sifting  into  4  sizes,  namely,  5  mm.  to  2  mm.  (1-5  in. 
to  1-12  in.)  ;  2  mm.  to  I  mm.  (1-12  in.  to  1-25  in.)  ; 
I  mm.  to  0.25  mm.  (1-25  in.  to  i-ioo  in.)  ;  lastly,  under 
0.25  mm.,  or  o.oi  in.  The  weight  in  pounds  of  a  cubic 
foot  of  each  sized  material,  closely  packed  and  shaken 
down,  was  then  ascertained,  and  lastly  the  weight  of  a 
cubic  foot  of  equal  parts  of  the  various  sizes,  mixed,  was 
determined.  The  specific  gravity  of  each  mineral  was 
then  ascertained,  as  given  in  column  6,  below.  Since  the 
weight  of  a  cubic  foot  of  water  is  very  nearly  62.5  lb.,  the 
weight  of  i  cu.  ft.  of  each  mineral  in  the  solid  state 
was  found  by  multiplying  the  specific  gravity  by  62.5, 
giving  the  figures  of  column  7.  The  increase  in  volume 
brought  about  by  crushing  each  mineral  to  the  above 
fineness  is  shown  in  column  8,  the  figures  of  which  are 
found  by  dividing  those  of  column  7  by  those  of  column  5. 


Material.                                                    0  «  o  m  ^  . 

22           -M  c  M  <u  ><+•«         « 

ys  i  .N   .          ^  P*   _         «  . 

<U5             o>%          ww  «C  "H           M  3°          £| 

•  S  "^              .S  M              S  N  .2  rt  S.2                o.  *o   *"              S 

Lb.         Lb.  Lb.  LbT  Lb.  Lb. 

Pure  Galena.  258.8    238.3  251.2  261.2  319.6  7.38  461  1.442 
Marcasite 

(mundic)..   119.5     H3-I  121.9  128.3  160.7  4-514  282  1.755 

Pure  Blende.    139.4     130.0  128.3  136.3  170.7  4.05  253  1.482 

Fluorspar  ...   100.6      97.8  98.3  100.7  127.9  3- 14  196  1.532 

Clean   Flint..     77.9      75.4  71.0  75.1  91.2  2.57  161  1.765 


NOTES  ON  ZINC  MINING  31 

The  common  statement  that  vein  material  occupies 
twice  the  space  after  breaking  is,  therefore,  not  quite  true 
of  rather  finely  comminuted  minerals;  and,  as  the  above 
results  show,  the  increase  in  volume  varies  according  to 
the  shape  of  the  particles,  since  the  flint  and  marcasite 
break  into  scales  and  elongated  angular  fragments,  while 
the  particles  of  the  other  minerals  are  nearly  isometric. 
Pyrite  and  bornite  would  no  doubt  give  very  different  re- 
sults from  those  obtained  with  marcasite. 

Specific  Gravity  and  Composition  of  Zinc  Minerals, 
Etc. — In  the  following  list  of  zinc  minerals,  and  other 
minerals  usually  associated  with  ores  of  zinc,  the  order 
followed  is  that  of  their  specific  gravities,  beginning  with 
the  heaviest.  The  specific  gravities  given  are  compiled 
from  standard  authorities.  The  percentage  compositions 
are,  however,  specially  computed,  using  the  International 
Atomic  Weights  for  1903,  and  refer  to  the  theoretically 
pure  minerals.  It  must  be  borne  in  mind  that  some  of 
the  minerals  named  are  very  rarely  found  in  a  state  of 
perfect  purity.  Thus  blende  nearly  always  contains  from 
0.2  to  i  per  cent  of  other  sulphides  than  that  of  zinc, 
while  marmatite,  pyrrhotite  and  chalcopyrite  are  very 
variable  in  composition. 

Assay  Results  as  a  Guide  in  Ore  Dressing. — The  assay 
of  a  sample  of  zinc-ore  concentrate,  showing  the  per- 
centage of  each  metallic  element,  as  zinc,  iron,  lead,  etc., 
gives  the  mine  manager  a  means  of  detecting  defects  in 
the  mill  work.  If  the  character  of  the  minerals  compos- 
ing the  ore  be  known,  the  percentage  of  each  mineral,  of 
which  one  element  is  determined  by  assay,  may  be  com- 
puted from  the  data  of  the  last  column  in  the  preceding 
table. 

Thus  in  a  lot  of  concentrate  consisting  of  blende, 
pyrite,  galena  and  sand  or  earthy  matter,  the  percentages 
of  zinc,  iron  and  lead  being  known  by  assay,  the  propor- 
tion of  blende  is  found  by  multiplying  the  zinc  by  100  and 


32 


THE  ECONOMICS  OF  MINING 


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NOTES  ON  ZINC  MINING 


33 


dividing  by  the  percentage  of  zinc  in  blende  (67.10), 
and  similarly  for  pyrite  and  galena.  The  sum  of  the  per- 
centages so  found,  deducted  from  100,  shows  about  the 
proportion  of  sand  or  earthy  matter  in  the  material,  a  fact 
often  very  desirable  to  know. 

Another  method  is  to  multiply  the  percentage  of  each 
element  found  by  assay,  by  a  factor  obtained  for  each 
mineral  by  dividing  its  molecular  weight  into  the  atomic 
weight  of  the  element. 

The  following  incomplete  list  of  such  factors,  also  spe- 
cially computed  from  the  International  Atomic  Weights 
for  1903,  will  be  found  of  use  to  mill  managers  as  well  as 
assayers : 

=  Zinc  blende. 
=  Silicious  calamine. 
—  Smithsonite    (car- 
bonate). 
=  Willemite. 
=  Hydrozincite. 
=  Zincite   (zinc  oxide). 

—  Franklinite. 
=  Pyrite. 

—  Galena. 
=  Anglesite. 

=  Cerussite       (lead      car- 
bonate). 

—  Chalcopyrite. 
=  Zinc  blende. 
=  Pyrite. 

=  Galena. 

=  Calcite. 

=  Fluorite  (fluorspar). 

=  Selenite  (gypsum). 


Metallic  zinc 

X   1.49 

Metallic  zinc 

X   1.844 

Metallic  zinc 

X   1.9174 

Metallic  zinc 

X   1.7064 

Metallic  zinc 

X   1.6526 

Metallic  zinc 

X   1.2446 

Metallic  zinc 

x  5.385 

Metallic  iron 

X  2.144  (or  2Vr)- 

Metallic  lead 

X   1.155 

Metallic  lead 

X   1.464 

Metallic  lead 

X   1.29 

Metallic  copper 

X  2.887 

Sulphur 

X  3-04 

Sulphur 

X   1.8718 

Sulphur 

X  74535 

Lime 

X   1.7856  (or10%6) 

Lime 

X   1.3945 

Lime 

X  3.072 

GOLD  MINE  ACCOUNTS 

(July    u,    1903.) 

The  Editor: 

SIR — I  am  glad  to  accept  your  invitation  to  make  some 
remarks  on  the  subject  of  gold-mine  accounts.  All  effi- 
ciently managed  mines  these  days  have  systematized  ac- 
counts showing  in  result  the  working  cost  per  ton  of  ore. 
But  there  is  a  most  harassing  lack  of  uniformity  in  the 
method  by  which  the  last  result  is  arrived  at,  and  in  this, 
some  discussion  in  your  esteemed  JOURNAL  could  be  most 
useful. 

First  and  foremost,  mine  accounts  should  be  systema- 
tized in  such  a  manner  as  to  prevent  fraud,  and  should 
be  so  presented  as  to  carry  conviction  of  honesty  to 
the  owners.  Second,  the  accounts  should  be  prepared 
in  such  a  way  as  to  show  the  expenditure  in  various  de- 
partments on  some  unit  basis,  so  as  to  enable  the  manager 
and  his  staff  to  compare  results  of  various  departments 
and  various  periods  within  his  own  mine  and  also  to 
compare  results  with  his  neighbors,  that  he  may  be  as- 
sisted in  his  intermediate  campaign  for  economy  and  im- 
provement. Third,  to  be  presented  in  such  a  way  that 
the  owner,  director,  shareholder  or  what  not  may,  for 
himself,  by  comparison,  determine  something  of  the  effi- 
ciency of  the  manager. 

At  the  outset  I  do  not  want  some  half-baked  person  to 
rise  and  remind  us  that  the  varying  conditions  (under 
which  mines  of  different  countries  work,  or  mines  of  the 
same  country,  for  that  matter,  or  even  mines  on  the  same 
vein,  or  even  different  parts  of  the  same  mine)  may  render 
comparisons  misleading.  We  all  know  that  the  factors 
which  govern  working  costs  are  labor,  supplies,  size 
of  orebodies,  character  of  the  ore,  volume  of  ore  treat- 
ed, depth,  etc.,  etc.,  and  that  these  factors  are  never  pre- 


GOLD  MINE  ACCOUNTS  35 

cisely  the  same  in  any  two  mines,  nor  for  any  two  months, 
and  that  pro-forma  comparisons  may  give  the  best  man 
a  black  eye  and  put  an  inefficient  man  on  a  high  pedestal. 
But  all  this  does  not  render  comparisons  valueless,  for  in 
the  hands  of  the  man  who  knows  the  conditions  these 
same  working  costs  enable  the  manager  to  determine  very 
quickly  the  avenues  for  improving  the  efficiency  of  a  de- 
partment, or  permit  the  owner  of  the  mine  to  determine 
the  efficiency  of  the  manager  himself.  The  rivalry  growing 
out  of  such  comparisons  in  its  incentive  to  economy  and 
highest  efficiency,  when  tempered  with  capacity,  has  been 
by  no  means  the  least  factor  in  reducing  gold  mining 
from  an  absolute  speculation  to  an  industrial  enterprise. 
In  order  that  these  valuable  influences  should  have  full 
play,  there  is  a  crying  need  for  greater  uniformity  in  the 
formulation  of  mine  accounts  into  the  ultimate  results 
of  working  costs.  This  is  not  a  new  idea,  but  the  useful- 
ness of  it  is  more  evident  these  later  years,  because  of  the 
constantly  increasing  publicity  given  to  working  results 
by  reason  of  the  large  proportion  of  mine  ownership  by 
public  stock  companies.  This  publicity  of  accounts  ren- 
ders results  available  for  comparative  purposes. 

The  first  purpose  of  accounts  requires  no  discussion 
here,  for  it  is  a  matter  of  competent  book-keeping,  and 
deflections  are  matters  for  the  police  to  look  into.  The 
usefulness  of  the  second  and  third  purposes  depend  for 
their  greatest  possibilities  upon  uniformity  in  the  same 
mine  and  on  neighboring  mines,  and  still  better,  on  all 
mines.  As  said,  all  well-managed  mines  show  results 
of  .expenditures  in  working  costs  on  tonnage  basis,  but  the 
variation  in  method  of  allocation  of  expenditures  to  vari- 
ous departments  differs  most  harassingly.  In  the  first  in- 
stance, in  America  and  South  Africa  the  short  ton  is  used,, 
while  in  Australia  and  India  the  long  ton  is  used,  and 
therefore  the  latter  are  10  per  cent  different.  In  most 
English-owned  mines  expenditure  is  divided  into  'Capi- 


36  THE  ECONOMICS  OF  MINING 

tar  and  'Revenue/  development  and  construction  being 
generally  charged  to  the  former,  and  written  off  the  lat- 
ter and  thus  to  working  costs,  by  redemption  or  deprecia- 
tion, and  a  wide  variation  exists  in  both  the  character 
of  the  expenditure  charged  to  capital  in  the  first  instance, 
and  in  the  amount  charged  off  afterwards.  For  instance, 
in  development,  some  managers  charge  winzes  and  raises 
to  development,  and  others  to  stoping.  Some  even  charge 
repairs  and  renewals  to  capital,  on  the  theory  that  they 
keep  the  plant  up  to  a  fixed  state  of  efficiency.  In  writing 
development  off  by  redemption  or  depreciation,  some  com- 
panies do  it  on  the  basis  of  the  average  cost  per  ton 
developed,  others,  to  beat  the  income  tax  commissioner, 
write  off  all  he  will  allow.  Some  companies  write  off 
depreciation  of  plant  on  a  known  life  for  the  mine,  others 
on  a  hoped-for  life.  Some  companies  distribute  a  part  of 
the  general  charges  over  capital  expenditure,  others 
charge  it  all  off  to  revenue  at  once.  Some  managers 
charge  pumping  to  ore  extraction  and  some  partly  to  de- 
velopment, while  others  charge  it  partly  to  milling,  as 
being  the  source  of  mill  water.  In  ore  treatment,  some 
companies  give  cost  of  treatment  on  one  generalized 
figure,  which  is  valueless  for  comparison,  because  one  ore 
may  involve  one  operation,  while  another  may  involve  five. 
Most  companies  distribute  treatment  costs  over  the  whole 
tonnage  milled,  yet  the  proportion  of  tailing  treated  by 
cyanide,  for  instance,  may  vary  from  50  per  cent  on  one 
mine  to  100  per  cent  on  another.  Some  companies  deduct 
the  cost  of  realizing  bullion  from  their  receipts,  while 
others  charge  it  to  working  costs,  etc.,  etc.,  ad  infinitum. 
In  a  few  instances  there  is  evident  intention  on  the  part 
of  the  management  to  obscure  real  costs,  but  in  most  it  is 
merely  difference  in  method  and  of  opinion.  Another 
feature  worth  discussion  is  how  far  expenditure  for  dissec- 
tion of  costs  is  warranted  by  results  to  be  attained,  and 
how  much  detail  can  be  used  within  the  realm  of  accu- 


GOLD  MINE  ACCOUNTS  37 

racy.  It  is  on  these  matters  where,  if  an  agreement  could 
be  reached,  discussion  would  be  most  valuable.  It  might 
be  a  work  for  the  American  Institute  of  Mining  Engi- 
neers and  the  English  Institution  of  Mining  and  Metal- 
lurgy to  appoint  a  commission  to  formulate  some  plan  of 
working  cost  statements,  as  a  result  of  such  discussions.  I 
am  sure  the  profession  would  loyally  introduce  and  adhere 
to  such  a  plan,  and  it  would  meet  the  approval  of  the  mine 
owner  at  the  same  time,  for  the  results  could  not  but  be 
beneficial  to  him  in  the  end.  H.  C.  HOOVER. 

London,  June  16,  1903. 


THE    PAYMENT    OF    EXTENSIONS    OF 
MINING  PLANT  OUT  OF  REVENUE 

BY  EDWARD  WALKER. 

(July   ii,    1903.) 

In  a  recent  London  letter  I  referred  to  the  principle 
laid  down  by  Mr.  C.  Algernon  Moreing  at  the  meeting 
of  shareholders  of  Great  Fingall  Consolidated,  that  all 
expenditure  on  development  of  a  mine  and  extension 
of  metallurgical  plant  should  be  paid  for  whenever  pos- 
sible out  of  revenue.  The  question  before  the  share- 
holders was  whether  the  new  plant  should  be  paid  for  by 
additional  capital  raised  by  the  issue  of  new  shares,  or 
whether  the  large  balance  of  divisible  profit  (some  £100,- 
ooo)  should  be  devoted  to  that  purpose. 

The  incident  opens  up  the  general  question  of  the 
suitability  of  the  ordinary  methods  of  accounting  to  the 
special  case  of  mining,  and  some  discussion  of  the  sub- 
ject would  'be  opportune. 

The  method  of  keeping  accounts  of  mining  companies 
as  adopted  in  London,  differs  in  no  way  from  the  stand- 
ard system  for  commercial  and  manufacturing  enter- 
prises. All  preliminary  expenditure  on  property  and 
plant,  subsequent  expenditure  on  extensions,  and  the 
cost  of  sinking  shafts,  are  charged  to  capital ;  and  current 
expenditure  on  labor,  supplies,  maintenance,  and  renew- 
als are  charged  to  revenue.  This  is  the  theoretical  prin- 
ciple, but  the  method  of  carrying  it  out  depends  upon 
the  circumstances  of  each  individual  case.  It  need  hard- 
ly be  said  that  the  great  desire  of  directors  is  to  show 
that  they  can  declare  a  dividend,  and  whenever  extra 
expenditure  becomes  necessary  for  the  purpose  of  sink- 
ing a  new  shaft,  or  providing  additional  or  improved 
plant,  there  is  always  an  inclination  not  to  interfere  with 


MINING  PLANT  EXTENSIONS  39 

the  dividends,  but  to  issue  new  shares.  If  the  mining 
market  is  brisk,  and  if  the  directors  are  held  in  good 
esteem,  owing  to  their  successful  management  of  the 
property,  there  is  very  little  difficulty  in  raising  the  ad- 
ditional capital.  If,  however,  the  market  is  depressed, 
and  the  directors  do  not,  for  one  reason  or  another, 
care  to  ask  for  subscriptions  to  new  shares,  then  the 
extra  expense  is  met  out  of  revenue  if  possible.  In 
other  cases,  when  it  is  impossible  to  issue  new  shares 
and  when  there  is  not  sufficient  accumulated  profit  to 
meet  the  required  expenditure,  temporary  loans  against 
the  ore  reserves  or  against  the  general  assets  of  the 
company  are  made  by  directors,  shareholders  or  others, 
and  the  loans  afterwards  paid  out  of  revenue. 

Typical  examples  of  the  various  methods  of  meeting 
extra  expenditure  may  be  given.  The  method  of  pro- 
viding for  it  by  the  issue  of  new  capital  is  well  exem- 
plified by  the  case  of  the  various  gold  mining  companies 
operating  in  the  Kolar  District  of  India,  under  the  man- 
agement of  Messrs.  John  Taylor  &  Sons.  Whenever 
money  has  been  required  for  increasing  the  plant  it  has 
been  raised  by  issuing  new  shares,  although  the  mines 
at  the  time  may  have  been  yielding  profits  larger  than 
the  amount  required.  For  instance,  the  Mysore  Gold 
Mining  Company  has  paid  over  three  million  pounds  in 
dividends,  but  during  its  dividend-paying  life  no  less 
than  £645,000  has  been  raised  by  the  issue  of  new  shares 
for  the  purpose  of  meeting  expenditure  on  additional 
plant,  on  the  general  overhauling  of  property,  and  on 
sinking  new  shafts.  The  original  capital  of  the  company 
was  £135,000,  and  at  six  different  times  new  shares  have 
been  created  of  a  nominal  value  of  £122,500.  As  these 
shares  were  all  issued  at  substantial  premiums,  the  cash 
received  amounted  to  £645,000,  as  above  mentioned.  In 
addition  to  these  shares  issued  for  cash,  shares  of  a 
nominal  value  of  £32,500  have  been  issued  for  the  pur- 


40  THE  ECONOMICS  OF  MINING 

chase  of  adjoining  properties,  so  that  the  nominal  capi- 
tal of  the  company  at  the  present  time  is  £290,000. 
This  policy  has  always  been  unanimously  agreed  to  by 
shareholders  in  the  Indian  group,  and  as  a  matter  of 
fact  the  new  shares  are  usually  absorbed  by  sharehold- 
ers pro  rat  a. 

An  illustration  of  the  second  method  of  paying  for 
extensions  is  to  be  met  with  in  the  case  of  the  Great 
Fingall  Consolidated,  already  referred  to.  Examples  of 
this  policy  are  also  to  be  found  in  the  companies  con- 
trolled by  the  Exploration  Company.  The  Tomboy 
Gold  Mines,  Limited,  was  floated  by  the  Exploration 
Company  in  1899,  with  a  capital  of  £300,000.  In  1902 
additional  plant,  to  the  extent  of  60  stamps  and  acces- 
sories, was  erected  and  paid  for  entirely  out  of  revenue. 
In  addition  to  this,  when  the  original  Tomboy  Mine 
showed  signs  of  exhaustion,  new  properties  adjoining 
were  acquired  out  of  revenue,  without  it  being  neces- 
sary to  issue  any  more  shares.  El  Oro  Mining  &  Rail- 
way Company  also  presents  another  example  of  the 
policy  of  the  Exploration  Company.  An  addition  of  100 
stamps  is  now  being  provided  from  revenue.  In  this 
case,  adjoining  properties  were  acquired  by  the  issue 
of  new  shares  as  purchase  price.  These  new  properties 
added  to  the  capital  value  of  the  possessions  of  the  com- 
pany. The  original  property  was  showing  no  signs  of 
exhaustion,  as  was  the  case  with  the  Tomboy,  where 
a  new  property  was  acquired  in  place  of  the  old  one, 
rather  than  in  addition  to  it. 

A  good  example  of  the  third  way  of  providing  exten- 
sions is  to  be  found  in  the  Great  Boulder  Perseverance, 
Mr.  Frank  Gardner's  chief  West  Australian  property. 
This  mine  was  originally  floated  in  1895  with  a  capital 
of  £175,006.  After  the  first  three  years  the  oxidized 
ores  came  to  an  end,  and  great  difficulties  were  experi- 
enced in  finding  a  suitable  process  for  treating  the  re- 


MINING  PLANT  EXTENSIONS  41 

fractory  ores.  There  were  no  surplus  profits  available 
for  experiment  or  for  erecting  a  large  plant.  The  cost 
was  entrely  borne  by  Mr.  Gardner  and  his  friends,  and 
the  amount,  something  like  £150,000,  has  since  been 
repaid  out  of  profits. 

Having  mentioned  the  usual  methods  of  mining-com- 
pany finance  adopted  in  London,  I  will  proceed  to  discuss 
the  general  question  as  to  the  applicability  of  the  ordinary 
methods  of  accounting  to  the  special  case  of  mining.  It 
is  held  by  a  great  many  professional  men  connected  with 
mining  that  far  less  expenditure  should  be  charged  to 
capital  account,  and  that  the  figures  at  which  the  original 
value  of  the  property  and  plant  stand  among  the  assets, 
should  be  reduced  as  rapidly  as  possible.  A  mine  is  not  a 
permanency  like  real  estate,  and  the  value  of  the  machin- 
ery depends  almost  entirely  on  the  supply  of  ore.  Some 
alteration  should  therefore  be  made  in  the  usual  practice 
of  entering  up  the  price  paid  for  the  property  and  equip- 
ment at  unalterable  figures.  It  is  true  that  most  of  the 
carefully  managed  mining  companies  make  allowances 
every  year  for  depreciation  of  plant,  but  few  make  any 
provision  for  the  depreciation  of  the  property  itself.  The 
consequence  is  that  shareholders  receive  dividends  which 
they  regard  as  profits,  and  concurrently  the  value  of  the 
shares  decreases.  The  real  profit  of  the  transaction  in 
buying  mining  shares  is  the  difference  between  the  origi- 
nal purchase  price  of  the  shares  and  the  sum  of  the  total 
dividends  added  to  the  eventual  price  of  disposal  of  the 
shares.  We  have  the  continual  phenomenon  in  London  of 
profits  to  mining  shareholders  concurrent  with  a  gradual 
or  sudden  loss  of  capital. 

Such  a  method  of  managing  mining  companies'  finances 
is  illogical.  Some  part  of  the  profits  of  each  year's  work 
should  be  devoted  to  the  reduction  of  the  capital  account, 
and  all  expenditure  subsequent  to  the  initial  cost  of  the 
property  and  equipment  of  the  mine  should  be  paid  out 


42  THE  ECONOMICS  OF  MINING 

of  the  revenue.  The  method  of  reducing  the  value  at 
which  the  property  and  original  plant  stands  in  the  bal- 
ance sheet  would  depend  largely  on  circumstances.  It 
might  be  agreed  from  the  first  that,  say,  one-fifth  of  the 
value  should  be  written  off  every  year,  and  when  the  total 
assets  had  thus  been  replaced  by  cash,  there  might  be  a 
return  of  capital.  Another  plan  would  be  to  have  a  re- 
valuation every  year,  and,  if  the  value  of  the  ore  reserves 
was  less  than  at  the  beginning,  to  replace  the  deficiency 
with  cash  from  the  year's  profits. 

It  might  also  be  suggested  that  the  nominal  capital  at 
the  end  of  every  year  should  be  rearranged  so  as  to  rep- 
resent the  actual  value  of  the  properties,  but  this  scheme 
would  lend  itself  to  much  abuse,  in  addition  to  which  the 
legal  fees  and  government  taxes  would  swallow  up  far  too 
much  money. 

It  is  not  often  that  a  rearrangement  of  the  nominal  cap- 
ital of  a  mining  company,  so  as  to  bring  it  nearer  the  real 
value  of  the  property,  takes  place ;  as  a  rule,  it  only  hap- 
pens when  a  mine  has  become  exceedingly  prosperous 
and  the  dividends  paid  are  so  high  that  the  market  quota- 
tion for  the  shares  is  greatly  enhanced.  Then,  for  the 
purpose  of  facilitating  market  dealings,  the  nominal  capi- 
tal of  the  company  is  expanded  so  as  to  bring  the  current 
quotation  nearer  par.  Recent  examples  of  the  capital 
being  reduced,  when  it  was  found  that  the  properties  were 
nearing  exhaustion,  are  to  be  found  in  the  case  of  Mason 
&  Barry,  and  the  Mountain  Copper  Company.  In  the 
former  case  certain  proportions  of  profits  were  distributed 
to  shareholders,  not  as  dividends,  but  in  reduction  of  the 
capital,  while  in  the  case  of  the  Mountain  Copper  Com- 
pany, the  company  was  reconstructed  and  the  shares  ex- 
changed for  debentures  which  are  redeemable  out  of  the 
profits. 

Discussion  on  the  subject  would  not  be  complete  with- 
out a  reference  being  made  to  the  incidence  of  the  income 


MINING  PLANT  EXTENSIONS  43 

tax  on  the  profits  of  mining  companies.  As  in  the  case 
with  directors,  so  it  is  with  the  income-tax  commissioners. 
They  like  to  be  able  to  show  a  large  profit.  They  are  very 
jealous  of  the  allocation  of  profits  to  what  they  call  capital 
expenditure.  Very  little  is  allowed  in  the  way  of  writing 
off  for  depreciation  of  plant,  and  profits  applied  to  the 
extension  of  plant  and  the  sinking  of  new  shafts 
are  invariably  assessed.  In  the  case  of  the  Mysore  com- 
pany, if  the  extensions  had  been  paid  out  of  revenue,  in- 
stead of  the  profits  being  divided  and  new  capital  issued, 
none  of  the  profits  thus  allocated  would  have  escaped  the 
income  tax.  Similarly,  the  profits  of  El  Oro  and  the 
Great  Fingall,  used  for  the  purpose  of  extending  the  plant, 
have  been  assessed.  The  commissioners  would  never 
dream  of  accepting  the  proposition  I  have  made  for  con- 
ducting the  finances  of  a  mining  company,  but  that  is  no 
reason  why  the  system  should  not  be  adopted. 

This  subject  is  capable  of  considerable  discussion,  and  I 
hope  that  your  readers  will  contribute  their  opinions  and 
•experiences. 


ORE  TREATMENT  AT   KALGOORLIE 

(August   15,    1903.) 

The  Editor: 

Sir — in  your  issue  of  July  u  Mr.  Philip  Argall  con- 
tributes some  valuable  discussion  regarding  the  Diehl 
process  as  relating  to  Cripple  Creek  ores.  As  Mr.  Ar- 
gall's  information  regarding  the  progress  of  metallur- 
gical practice  at  Kalgoorlie  seems  to  be  three  years 
behind,  and  therefore  his  basis  of  argument  wholly  er- 
roneous, I  trespass  upon  your  space  to  give  some  recent 
and  detailed  costs.  Aside  from  other  matters,  I  think  I 
can  show  to  Mr.  Argall  that  he  is  wholly  unwarranted 
in  believing  that  the  roasting  processes  must  ultimately 
prevail  at  Kalgoorlie.  Much  progress  has  been  made 
in  both  processes  at  that  place,  and  Mr.  Argall's  figures, 
which  were  taken  in  the  early  stages  of  sulphide  treat- 
ment, do  great  injustice  to  both  methods. 

I  think  I  can  do  no  better  than  to  give  the  detailed 
costs  in  the  Lake  View  mill,  choosing  that  one  because 
it  is  treating  an  ore  of  similar  character  and  a  tonnage 
more  comparable  to  the  tonnages  handled  by  the  large 
roasting  plants  at  Kalgoorlie.  The  Lake  View  mill, 
however,  will  not  ultimately  be  the  best  advocate  of  the 
wet-milling  bromo-cyanide  method,  for  it  is  an  adapted 
plant  with  a  stamp-mill  of  bad  design  and  construction 
for  a  basis,  and  the  accessory  plant  is  not  arranged  to 
best  advantage.  Moreover  the  power  plant  on  this  mine 
(now  under  construction)  is  the  worst  on  the  field.  Yet, 
even  with  these  handicaps,  the  results  are  far  different 
from  those  upon  which  Mr.  Argall,  probably  for  lack  of 
more  recent  data,  has  formed  his  judgment. 

I  have  taken  the  month  of  March  as  an  average 
period,  because,  since  that  time,  experiments  with  a  50- 
ton  daily  plant  of  another  process  have  been  in  progress 


ORE  TREATMENT  AT  KALGOORLIE   4H 

and  have  been  charged  into  costs,  somewhat  confusing 
issues;  the  costs  given,  however,  are  a  fair  average.  I 
have  reduced  all  tonnages  and  costs  mentioned  in  this 
communication  from  the  long  ton  to  the  short  ton,  so 
as  to  be  on  the  footing  of  American  practice. 

During  the  month  a  varying  portion  of  a  7o-stamp 
mill  treated  8,444  tons  with  a  duty  of  5,191  tons  per 
stamp  per  day.  The  costs  include  superintendence,  etc., 
but  not  depreciation.  Water  does  not  include  boiler- 
feed,  which  is  included  in  power.  The  costs  of  milling 
and  concentrating  8,444  tons  were,  per  ton : 

Milling — 

Salaries,  and  wages $o .  0997 

Water   0.0257 

Supplies    0.0417 

Maintenance    0.1500 

Power    0.3514 

Assaying   0.0037 


Total  milling $0.6722 

Concentrating — 

Salaries  and  wages $0.0896 

Water   o .  0257 

Supplies    0.0028 

Maintenance   o. 0208 

Power    o .  0404 

Assaying    0.0019 

Total   concentrating $0.1812 

Total,  per  ton  milled $0.8534 

The  cost  of  treatment  of  7,962  tons  of  tailing  were 
as  follows,  per  ton: 

Salaries  and  wages $0.5040 

Potassium  cyanide   0.4514 

Bromo-cyanide    0.4277 

Lime    0.0322 

Zinc  shavings   0.0119 

Sulphuric   acid 0.0090 

Other  supplies  0.0793 

Water   0.0271 

Maintenance    0. 1610 


46  THE  ECONOMICS  OF  MINING 


Power    $0.5274 


Assaying   0.0405 


Total,  per  ton  of  tailing $2.2715 

The  costs  of  roasting  and  cyaniding  482  tons  of  con- 
centrate were  as  follows,  per  ton  : 

Roasting — 
Salaries  and  wages $o .  9497 

Fuel ,. 0.3157 

Supplies    0.0368 

Transport  and  drying  of  ore 0.4050 

Maintenance    o .  0443 

Power    0.2354 

Assaying   0.0847 

Total    $2 . 0716 

Cyaniding — 

Salaries  and  wages '. . . .  $o .  5391 

Potassium  cyanide    o .  6763 

Sulphuric  acid   0.0193 

Lime 0.0114 

Zinc  shavings 0 . 03 14 

Water   0.0859 

Other  supplies    0.1809 

Maintenance 0 . 3593 

Power o .  6029 

Assaying    0.1428 


Total  $2.6493 

Total  cost,  per  ton  of  concentrate $4.7209 

Combining  these  statements  of  cost,  and  reducing  all 

the  averages  to  the  basis  of  tons  milled,  we  obtain  the 

following  results: 

Milling  and  concentrating $0.8534 

Treatment  of  tailing 2. 1422 

Roasting  and  cyaniding  concentrate 0.2699 

Total  cost  per  ton  milled $3 . 2655 

Royalty    o .  1069 

Total  cost  $3 . 3724 

The  yield  was  about  $14  per  ton,  the  extraction  92 
per  cent,  and  of  this  65  per  cent  was  secured  from  the 
concentrate  and  therefore  did  not  pay  royalty.  The  de- 
fective arrangement  and  construction  of  the  mill  and 


ORE  TREATMENT  AT  KALGOORLIE   47 

power  plant  resulted  in  a  cost  for  power  and  main- 
tenance alone  in  excess  of  these  costs  on  the  Oroya 
Brownhill  of  38.5^  per  ton,  although  the  latter  treats 
but  4,000  tons  per  month,  so  it  must  be  obvious  that  a 
well  constructed  plant  on  the  Lake  View  would  work  at 
a  cost  of  under  $3  per  ton.  The  Ivanhoe  plant,  now  in 
course  of  alteration  to  treat  12,000  tons  per  month,  will 
work  for  not  over  $2.75,  probably  $2.50.  The  Oroya 
Brownhill  mill  is  now  in  course  of  enlargement  and  al- 
teration, and  when  complete,  although  treating  the  most 
difficult  ore  on  the  field,  should  show  also  good  results. 
However,  the  figure  of  $3  above  is  sufficient  to  show  the 
erroneousness  of  the  figures  of  $7.86  in  one  instance  and 
$5.77  plus  royalty  in  another,  as  quoted  by  Mr.  Argall 
for  the  Diehl  costs. 

Lack  of  equally  recent  and  detailed  data  from  the 
larger  roasting  mills  at  Kalgoorlie  renders  comparison 
of  costs  difficult.  The  annual  report  of  the  Great  Boulder 
for  1902  shows  the  costs  on  that  mine  to  be  $5  per  ton, 
but  this  has  been  somewhat  reduced  since,  I  believe. 
The  Great  Boulder  Perseverance,  treating  about  12,500 
short  tons  per  month,  gives  the  latest  results,  with  the 
largest  tonnage  on  the  field,  at  $3.65;  but  what  items 
are  included  I  do  not  know. 

The  wet-milling  bromo-cyaniding  method  requires 
about  20  per  cent  less  power  than  the  dry-milling  roast- 
ing method,  and  involves  less  cost  of  maintenance,  and 
also  involves  not  over  70  per  cent  of  the  first  cost,  and 
therefore  less  depreciation;  and  above  all  it  avoids  dry- 
ing the  ore  and  roasting  94  per  cent  of  it.  These 
economies  are  accomplished  practically  at  the  extra 
expense  of  concentration,  bromo-cyanide  and  royalty. 
The  use  of  bromo-cyanide  partly  replaces  potassium  cy- 
anide otherwise  required,  and  altogether  on  the  Lake 
View  these  special  items  involve  about  7oc.  per  ton. 
On  the  other  hand  a  dry  crushing  mill  of  the  same 


48  THE  ECONOMICS  OF  MINING 

tonnage,  treating  Lake  View  ore  for  extra  drying,  extra 
power,  extra  roasting,  extra  cyanide  and  extra  wear  and 
tear,  would  involve  fully  $2  per  ton. 

There  is  nothing  very  novel  in  the  Diehl  process  be- 
yond the  well  understood  methods  of  stamp-milling, 
concentrating  and  cyanide  treatment  of  gold  ores,  ex- 
cept the  grinding  of  the  entire  tailing  to  slime  and 
the  addition  of  bromo-cyanide.  The  rationale  of  the 
process  makes  much  toward  economy  and  steady  im- 
provement. The  royalties  expire  in  another  four  years, 
but  aside  from  this  I  think  I  have  shown  that  there  is 
no  prospect  of  displacing  the  process  in  that  region  in 
favor  of  dry  crushing  and  roasting,  especially  as  the 
comparative  extraction  seems  to  favor  the  wet  method. 

Many  details  of  Mr.  Argall's  understanding  of  Kal- 
goorlie  practice  are  altered  by  present  practice,  more 
especially  the  fact  that  the  dry-crushing  roasting  mills 
grind  all  ores  to  slime  for  filter-press  treatment,  instead 
of  treating  a  portion  by  percolation  as  he  states.  The 
wet-crushing  mills  do  not  return  roasted  concentrate 
to  the  battery.  Kalgoorlie  metallurgists  do  not  have  the 
same  apparent  aversion  to  filter-press  treatment  of  tail- 
ing as  Mr.  Argall.  The  economy  of  percolation  of 
sand  over  agitation  and  filter-press  of  slime  for  a  pe- 
riod of  six  months  on  the  Ivanhoe  is  but  4oc.  per  ton, 
beside  the  cost  of  grinding,  of  which  a  portion  would 
disappear  in  the  greater  economy  of  filter-pressing  if 
the  whole  product  were  so  handled.  The  compensating 
advantage,  in  extraction  by  fine  grinding,  considerably 
more  than  makes  up  this  difference  in  either  process. 

As  to  the  relative  merits  of  the  two  processes,  as  ap- 
plied to  Cripple  Creek  conditions,  I  am  not  sufficiently 
informed  as  to  the  character  of  the  ore  to  offer  a  judg- 
ment, having  only  been  on  that  ground  for  a  few  days; 
but  I  might  point  out  that  power  costs  at  Cripple  Creek 
are  not  15  per  cent  of  that  at  the  Lake  View  mine,  that 


ORE  TREATMENT  AT  KALGOORLIE   49 

the  cost  of  water  would  be  almost  nil,  the  cost  of  cyanide 
and  other  supplies  less,  and  that  the  treatment  of  con- 
centrate would  be  much  more  economical.  These  four 
items  would  permit  treating  Lake  View  ore  under  Crip- 
ple Creek  conditions  with  a  well  constructed  mill  of, 
say,  8,500  tons  capacity,  for  not  over  $2  per  ton.  A 
point  worthy  of  consideration  by  Cripple  Creek  opera- 
tors is  the  adaptability  of  this  process  for  erection  on 
the  mines  themselves,  and  therefore  the  avoidance  of 
freight  charges  and  customs-mill  profits  and  especially 
the  possibility  of  modifying  the  practice  to  take  advan- 
tage of  some  of  the  more  favorable  characteristics  of 
Cripple  Creek  ores,  as  compared  to  those  of  Kalgoor- 
lie.* 

London,  July  29,  1903.  H.  C.  HOOVER. 


*  In  a  former  article  on  the  subject  Lake  View  costs  were 
given,  including  transport  to  the  mill ;  in  this  statement,  for  com- 
parative purposes,  they  have  been  omitted.  It  is  especially  point- 
ed out  again  that  the  above  costs  are  upop  a  short-ton  basis. 


GOLD  MINING   ACCOUNTS 

(August  15,  1903.) 

The  Editor: 

SIR — In  your  issue  of  July  n,  Mr.  H.  C.  Hoover,  at 
your  request,  opens  for  discussion  the  subject  of  gold 
mining  accounts.  Being  associated  with  the  management 
of  a  number  of  very  prosperous  mines  in  various  parts  of 
the  world,  Mr.  Hoover  speaks  with  the  authority  of  one 
in  a  position  to  know  and  one  who  appreciates  the  value 
of  uniformity  in  the  treatment  of  expenditures  of  capital 
and  of  revenue  and  in  the  keeping  of  mining-costs 
accounts. 

In  the  business  of  mining,  custom  has  not  yet  estab- 
lished a  uniform  method  of  charging  expenditures  for  de- 
velopment or  for  the  extension,  renewal  and  maintenance 
of  machinery,  plant  and  equipment.  Owing  to  the  vary- 
ing conditions  under  which  most  mining  ventures  are 
financed  and  managed  from  the  head  office — leaving  the 
varying  conditions  at  the  mine  out  of  the  question — it  is 
doubtful  if  uniformity  in  these  particulars  can-,  or  ever  will, 
be  attained.  But  it  is  possible,  and  quite  within  the  prov- 
ince of  the  profession,  to  urge  a  consistent  degree  of  uni- 
formity in  the  practice  of  stating,  if  not  of  keeping,  mine 
working  costs.  The  suggestion  that  a  commission  of  the 
technical  societies  be  appointed  to  take  up  this  work  ought 
to  meet  with  favor. 

Discussion  of  the  feature  suggested  as  to  "how  far  ex- 
penditure for  dissection  of  costs  is  warranted  by  results 
to  be  attained  and  with  how  much  detail  it  can  be  done 
within  the  realm  of  accuracy"  might  lead  to  a  more  gen- 
eral discussion  of  the  whole  subject  of  cost  keeping. 

The  results  to  be  attained,  or  in  other  words,  the  ben- 
efits realized  by  a  frequent,  regular  and  systematic  dissec- 
tion of  working  costs,  are  commonly  acknowledged. 


GOLD  MINING  ACCOUNTS  51 

Economies  are  accomplished,  and  a  material  reduction 
of  mining  costs  is  effected  in  the  saving  of  time,  energy 
and  money.  It  is  possible  to  secure  specific  and  detailed 
information  of  the  costs  of  work  at  the  time  of,  and  during, 
its  progress.  A  better  opportunity  is  afforded  for  making 
a  critical  discrimination  between  capital  and  revenue  ex- 
penditures, as  the  legitimate  operating  expenses  are  writ- 
ten off  each  month.  And  the  manager,  depending  with 
full  confidence  upon  his  monthly  cost-sheet,  is  relieved 
of  a  mass  of  detail  and  his  mind  is  free  and  clear  for 
directing  current  operations  and  planning  for  the  future. 
But  probably  the  most  important  result,  and  not  so  gen- 
erally understood,  is  the  thorough  industrial  organization 
promoted  by  the  conserving  influence  of  a  system  of  cost 
keeping.  A  department  for  finding  costs  must  be  sup- 
ported by  the  various  operating  departments.  Regular 
written  reports — the  cement  of  commercial  organization — 
are  required  from  foremen,  time-keepers  and  others,  from 
which  are  secured  the  data  for  recording,  segregating  and 
distributing  the  expenditures  for  labor.  Reports  and 
records  from  the  stores  department  maintain  a  systematic 
and  complete  control  over  the  distribution  of  supplies. 
In  this  way  responsibility  is  fixed,  co-operation  is  secured, 
the  active  interest  of  every  employee  is  enlisted,  and  a 
criterion  of  efficiency  established.  Upon  the  theory  that 
the  person  who  lacks  enthusiasm  in  himself  can  never 
arouse  it  in  others,  this  effectual  inter-staff  collaboration 
is  ^preserved  in  the  knowledge  that  the  manager  is  per- 
sonally interested  in  and  carefully  scrutinizes  each 
month's  statement  of  costs.  And  the  best  of  it  is  that  by 
virtue  of  this  same  organization,  of  which  cost  finding  is 
but  a  detail,  these  results  and  benefits  are  secured  at  prac- 
tically no  expense  whatever.  That  is  to  say,  a  compre- 
hensive system  of  cost-keeping  may  be  established  and 
maintained  at  no  increase  of  expense  for  clerical  assist- 
ance or  otherwise.  For  the  work  as  it  comes  into  the 


52  THE  ECONOMICS  OF  MINING 

accounting  department  can  be  so  methodized  that  the 
regular  staff  usually  employed  at  the  mine  office  can  easily 
handle  it.  As  to  how  elaborate  a  proper  dissection  of  costs 
can  be  made,  it  can  be  asserted  with  reasonable  assurance 
that  the  development  of  a  system  of  cost-finding  need 
depend  only  upon  the  amount  of  detailed  information  that 
can  be  used  by  the  management.  The  actual  operation 
of  a  practical  system  of  mine  accounting  in  effective 
service  at  the  War  Eagle  and  Center  Star  mines,  of  Ross- 
land,  B.  C.,  has  proved  this.  And  the  same  experience 
has  demonstrated  that  such  a  system  can  be  perfected  and 
conducted  which  will  exhibit  in  accurate  detail,  from  ink 
to  interest,  the  segregation  of  expenditures  for  labor, 
supplies  and  indirect  expenses,  and  their  determinate 
allocation  to  each  and  every  stope,  drift  or  other  heading, 
separately,  in  which  work  is  in  progress. 

This  experience  and  this  statement  relative  to  the  ex- 
penditure necessary  to  carry  out  an  effectual  system  of 
cost-keeping  is  submitted  in  the  hope  that,  with  the  edge 
taken  off  the  question  of  expense,  a  more  general  discus- 
sion of  other  and  more  important  phases  of  the  subject 
will  follow.  CHARLES  V.  JENKINS. 

Rossland,  B.  C.,  August  i,  1903. 


MINE  VALUATION    BY  GOVERNMENT 

(Editorial,  August  8,   1903.) 

Among  the  various  proposals  for  enlarging  the  duties 
of  a  paternal  government,  the  most  startling  up  to  date 
is  that  which  was  seriously  made  in  London  by  the 
President  of  the  Council  of  West  Australian  Mine-own- 
ers, who  suggested  that  a  general  inspector  of  mines  be 
appointed  by  the  State  government  with  a  view  to 
periodical  visits  for  the  purpose  of  sampling  and  check- 
ing the  ore  reserves  and  estimating  the  value  of  the  pro- 
ducing mines.  Furthermore,  this  inspector  was  to  re- 
ceive a  salary  which  should  "place  him  beyond  the  pale 
of  temptation."  At  the  meeting,  Mr.  H.  C.  Hoover 
pointed  out  the  absurdity  of  the  idea,  but  it  seems  to> 
have  been  taken  seriously  by  a  number  of  those  interested 
in  West  Australian  mines. 

The  avowed  purpose  of  this  innovation,  as  stated  by 
its  proposer,  was  to  do  away  with  "the  intrigue  and 
manipulation  of  market  operators  who,  for  their  own 
base  ends,  bribe  the  officers  in  charge  of  the  mines  to 
work  the  latter  in  the  interests  of  the  market,"  etc.  It. 
must  be  confessed  that  the  wide  divergence  in  the  esti- 
mates of  ore  reserves  by  different  engineers,  which  has 
characterized  the  sensational  fluctuations  in  the  share 
quotations  of  the  Kalgoorlie  mines,  does  justify  criti- 
cism and  warrants  thoughtful  consideration.  On  several 
occasions  during  the  last  ten  years  the  share  market 
has  been  rigged  by  concerted  action  between  managers 
and  operators,  some  of  whom  have  been  directors;  in 
part,  this 'is  explained  by  the  fact  that  the ^ mine-owners 
of  the  boom  period  have  included  a  large  proportion  of 
accidentally  rich  men  of  low  antecedents.  Various 
coteries  have  striven  in  turn  to  oust  each  other  in  order 


54  THE  ECONOMICS  OF  MINING 

to  control  the  rate  of  production  and  sources  of  infor- 
mation at  the  mines.  Several  infamous  episodes  have 
disgraced  the  history  of  the  Kalgoorlie  companies,  and 
it  has  required  much  good  hard  work  to  restore  West 
Australian  mines  to  the  position  of  respectable  invest- 
ments which  many  of  them  now  occupy. 

Of  course,  the  idea  of  a  government  inspector,  to 
value  the  mines  as  an  independent  appraiser,  is  wholly 
fanciful;  the  cost  of  sampling  the  large  mines  of  one 
district  alone,  that  is,  Kalgoorlie,  would  run  into  half 
a  million  dollars,  as  Mr.  Hoover  said;  nor  must  the 
element  of  time  be  forgotten;  it  would  take  a  competent 
engineer  at  least  three  years  to  do  the  work  thoroughly 
at  Kalgoorlie  alone,  and  it  is  safe  to  say  that  such  a  man 
would  never  be  able  to  keep  pace  with  the  development 
taking  place  even  in  a  few  of  the  largest  mines  of  Western 
Australia.  Moreover,  such  a  man,  unless  appointed  for 
life,  would  be  the  sport  of  political  intrigue,  and  if  his  posi- 
tion were  safe  beyond  dismissal  his  power  would  be  such 
as  it  is  inadvisable  to  delegate  except  under  conditions 
for  which  there  is  no  other  remedy. 

But  there  is  another  remedy.  Let  it  be  recognized 
that  it  is  as  unprofessional  for  engineers  to  traffic  in 
mining  shares,  especially  those  of  mines  under  their 
management,  as  it  is  for  brokers  to  buy  and  sell  se- 
curities for  their  own  account.  Give  up  the  idea  that  a 
man  is  a  better  manager  by  becoming  a  stockholder; 
recognize  that  his  judgment  becomes  vitiated  by  heavy 
financial  participation ;  pay  him  handsomely ;  not  for  put- 
ting up  the  price  of  shares,  but  for  bringing  the  costs 
down;  and  when  this  has  been  done,  turn  round  to  head- 
quarters and' tell  the  directors  that  they  are  wrong  when 
they  gamble  in  the  shares  of  the  company  whose  trus- 
tees they  are ;  let  them  publish  all  information  from  the 
mine  promptly  and  before  they  use  it  for  their  own  ad- 
vantage ;  let  it  be  beneath  a  director's  dignity  to  sneak 


MINE  VALUATION  BY  GOVERNMENT     55 

around  the  corner  with  a  bit  of  official  information  be- 
fore it  is  formally  published;  and  then,  as  a  final  step 
calculated  to  lessen  the  vagaries  of  ore  estimates,  elect 
directors  who  have  had  sufficient  experience  in  the  busi- 
ness of  mining  to  be  capable  of  choosing  competent 
managers  and  of  supporting  them  loyally  when  once 
chosen.  This  will  be  much  cheaper  than  the  appoint- 
ment of  the  impossible  official  suggested  by  the  Presi- 
dent of  the  Council  of  West  Australian  Mine-owners. 


COST   PER    TON   AS  A   BASIS  OF  MINE 
VALUATION 

BY  R.  OILMAN  BROWN. 

(August  29,  1903.) 

Hardly  second  in  importance  to  the  determination  of 
value  per  ton,  by  careful  and  systematic  sampling,  is  the 
determination  of  cost  per  ton  from  the  mine  accounts. 
The  object  of  sampling  has  been  attained  when  the  gross 
valuable  content  of  the  ore  exposed  in  the  mine  has 
been  determined.  This,  for  the  sake  of  convenience  in 
subsequent  calculation,  is  usually  reduced  to  value  per 
ton.  From  this  gross  value  per  ton  must  be  deducted  the 
total  cost  per  ton  and  the  loss  per  ton  in  treatment,  the 
remainder  being  the  net  value  per  ton.  Obviously  an 
error  in  cost  per  ton  is  just  as  important  as  an  error  in 
gross  value  per  ton,  so  that  it  is  necessary  to  exam- 
ine with  as  careful  scrutiny  the  method  of  obtaining  the 
one  as  of  the  other.  Several  pitfalls  have  been  pointed 
out  recently  in  the  columns  of  this  JOURNAL  which  will 
be  ignored  in  this  present  article ;  or,  rather,  they  are  as- 
sumed to  have  been  satisfactorily  avoided,  the  desire 
being  not  to  obscure  another  factor  in  valuation  which 
has  been  touched  upon  but  lightly,  if  at  all. 

It  is  not  intended  in  the  present  article  to  go  into  the 
details  of  mine  accounting,  but  it  will  be  assumed  that 
in  some  way  of  other  the  engineer  has  obtained  certain 
segregated  totals  representing  the  expenditure  during  a 
certain  period  in  the  various  operations  connected  with 
mining  and  beneficiating  the  ore,  and  that  the  sum  total 
of  these  segregated  accounts  represents  the  total  cost  of 
operations  for  the  period  in  question. 

It  is  usual  to  divide  these  segregated  totals  by  the  tons 
of  ore  treated  during  the  same  period,  and  to  call  the 
quotients  the  cost  per  ton  for  the  various  departments. 


BASIS  OF  MINE  VALUATION  57 

In  a  certain  sense  the  sum  of  these  is  a  cost  per  ton, 
though  not  properly  to  be  considered  the  cost  per  ton, 
as  the  result  is  rather  a  hazy  approximation  representing, 
perhaps,  average  work  for  the  mine,  but  not  sufficiently 
definite  to  be  used  with  confidence  in  the  delicate  work 
of  valuing  ore  reserves. 

Let  us  assume  certain  natural  divisions  of  the  accounts 
into  stoping,  development,  reduction  and  general  ex- 
penses. All  the  segregations  can  be  easily  grouped  under 
these  headings ;  and  this  would  naturally  be  done  in  the 
process  of  arriving  at  the  cost,  in  the  manner  to  be  de- 
scribed. In  the  inexact  method  commonly  employed, 
these  totals  would  all  be  divided  by  the  same  tonnage — 
probably  by  the  tonnage  reported  from  the  mill  or  reduc- 
tion works,  whereas,  this  would  give  true  results  only  for 
the  last  two  items,  namely,  reduction  and  general  ex- 
pense. For  stoping,  the  result  might  be  approximate  ex- 
cept in  the  case  of  a  mine  carrying  a  considerable  amount 
of  ore  in  the  stopes.  For  development,  it  could  give  the 
true  value  only  when  the  same  amount  of  ore  is  stoped 
as  is  developed  during  the  period.  If  development  falls 
behind,  the  result  per  ton  would  be  too  little;  if  it  ex- 
ceeds the  output,  it  would  be  too  much. 

This  is  the  general  statement  of  the  matter,  but  it  can 
be  made  clearer  by  considering  a  concrete  case.  It  is 
proper  to  say  that  this,  though  based  on  practice,  has  been 
elaborated,  with  the  assumption  of  certain  values,  to  suit 
more  general  conditions. 

The  period  is  12  months. 

Tons  treated,  50,000. 

Total  return  per  ton,  $5.26. 

Total  loss  per  ton,  64C. 

Total  gross  value  per  ton  in  ore,  $5.90. 

Herewith  are  given  in  tabulated  form  the  costs  of  the 
various  departments  and  the  costs  per  ton,  as  commonly 
calculated : 


58  THE  ECONOMICS  OF  MINING 

Per  ton 
basis 
of  tons 
Total.  treated. 

Stoping    $58,000  $i .  16 

Development    50,000  i.oo 

Deduction 92,000  1.84 

General  expenses  22,000  .44 


Total  $222,000  $4-44 

The  following  tonnages  are  also  given: 

Tons. 

Ore  broken  in  the  stopes 10,000 

Ore  standing,  blocked  out,  ready  for  breaking 100,000 

Ore  reasonably  expected,  but  partly,  if  at  all,  developed. .     50,000 

Total    160,000 

These  are  the  quantities  assumed  to  be  found  by  the 
engineer  on  his  investigation  of  the  property,  and  the  re- 
coverable value  per  ton  will  be  taken  at  the  average  of  the 
past  year,  which  we  will  assume  to  have  been  determined 
to  be  the  fact  by  careful  sampling.  The  most  natural 
way  of  calculating  the  value  of  these  reserves  would  be  as 
follows : 

Total  recoverable  value  of  160,000  tons,  at  $5.26. $841,600 

Costs  on  160,000  tons,  at  $4.44 710,400 

Apparent  profit  in  reserves $131,200 

This  is  manifestly  incorrect.  Stoping  and  development 
should  not  be  charged  against  ore  already  broken,  nor 
should  development  be  charged  to  that  standing  blocked 
out  and  ready  for  stoping.  The  estimate  should  read  as 
follows,  assuming  the  figures  for  cost  per  ton  to  be 
correct : 

10,000  tons  broken  in  stopes,  at  $2.28  per  ton  for  milling 

and  general  expense $22,800 

100,000  tons  developed,  ready  for  stoping,  at  $3.44 

($2.28  +  $i.i6) 344,ooo 

50,000  tons,  reasonably  expected,  but  not  developed,  at 

$4.44  222,000 


Total  costs  $588,800 

160,000  tons,  recoverable  value  as  above 841,600 

Net  profits  252,800 

The  cause  of  the  great  difference  is  obvious.    It  should 
be  noted  that  in  the  accounts,  transportation  and  handling 


BASIS  OF  MINE  VALUATION  59 

costs  are  assumed  to  belong  in  general  expenses.  The 
above  figures  must  be  taken  as  thrown  in,  apart  from  the 
fundamental  matter  with  which  this  article  opened,  and 
they  contain  errors,  as  was  indicated  in  our  opening  lines. 

Reduction  costs  and  general  expense  are  properly  re- 
duced to  the  per  ton  basis  by  dividing  by  50,000  tons,  but 
stoping  and  development  cannot  properly  be  so  reduced 
until  we  know  whether  50,000  properly  represents  the 
tons  stoped  and  the  tons  developed.  In  what  follows  we 
are  using  some  quantities  that  an  engineer  examining  the 
property  can  scarcely  have  come  at  directly,  and  indeed 
he  will  be  fortunate  if  he  has  them  at  all ;  but,  recognizing 
their  importance,  by  inquiry  and  estimate,  he  must  arrive 
at  some  sort  of  a  probable  value  for  them. 

We  have,  as  a  general  proposition,  that  the  actual 
amount  of  ore  broken  during  the  year  is  equal  to  the  ore 
on  hand  broken  at  the  end  of  the  year,  plus  the  ore  treated 
during  the  year,  and  minus  the  ore  on  hand  broken  at  the 
beginning  of  the  year.  In  the  same  way  the  ore  devel- 
oped during  the  year  is  equal  to  the  ore  blocked  out  at  the 
end  of  the  year,  plus  the  tons  of  ore  broken  during  the 
year,  and  minus  the  ore  standing  blocked  out  at  the  begin- 
ning of  the  year.  Applying  this  to  our  concrete  case,  we 
will  assume  the  following  values  for  tonnage  at  the  be- 
ginning of  the  year : 

Tons. 

Broken  in  the  stopes 20,000 

Standing  blocked  out 120,000 

Reasonably  expected  . ., 60,000 

Ten  thousand  tons  plus  50,000  minus  20,000  equals 
40,000,  which  turns  out  to  be  the  actual  ore  stoped  during 
the  year,  so  that  the  true  cost  of  stoping  per  ton  is  58,000 
divided  by  40,000,  equals  $1.45  per  ton.  In  the  same  way 
100,000  plus  40,000  minus  120,000  equals  20,000  tons, 
the  actual  ore  developed  during  the  year ;  and  $50,000,  the 
total  spent  on  the  development,  divided  by  20,000  tons, 
equals  $2.50  per  ton,  the  true  cost  of  developing  a  ton  of 


60  THE  ECONOMICS  OF  MINING 

ore.  Inasmuch  as  no  costs  are  credited  in  this  discussion 
to  the  ore  reasonably  expected,  we  need  not  carry  this 
further,  though  the  same  reasoning  would  hold  in  regard 
to  it.  Collecting  our  true  cost  per  ton,  we  have : 

Stoping   $i .  45 

Development    2 . 50 

Reduction   i  .84 

General  expense   44 

Giving  the  true  total  cost  per  ton  at $6.23 

This  shows  that  the  ore  at  this  mine  will  not  actually 
pay  expenses  for  handling  unless  greater  economies  can 
be  practiced;  whereas,  our  first  calculation  gave  a  profit 
per  ton  of  about  8oc.  To  a  certain  extent,  then,  the 
matter  concerns  the  mine  manager  as  well  as  the  examin- 
ing engineer,  though  it  is  in  the  interest  of  the  latter  in 
particular  that  this  article  was  prepared. 

Proceeding  next  with  the  valuation  of  ore  reserves,  we 
reproduce  our  earlier  figures  with  the  corrected  costs  in- 
troduced : 

10,000  tons,  broken,  at  $2.28  per  ton $22,800 

100,000    tons,    developed,    ready    for    breaking,    at    $3.73 

($2.28  +  $1.45)   per  ton 373,coo 

50,000  tons  ore,  reasonably  expected,  at  $6.23 311,500 


Total    $707,300 

Recoverable  value,  as  above. . . 841,600 

Net  value  on  the  reserves. 134,300 

Iii  order  to  lay  the  whole  matter  more  clearly  open  and 
even  at  the  risk  of  being  tedious,  it  is  worth  our  while  to 
make  another  assumption  regarding  tonnages  at  the  be- 
ginning of  the  period,  as  below : 

Tons. 

Broken  in  the  stopes None. 

Standing  ready  for  breaking 80,000 

The  tonnage  and  cost  per  ton  follow  in  summary : 

Tonnage  Cost 

for  year.  per  ton. 

Stoping    60,000  $0.97 

Development   80,000  0.62 

Reduction  and  general  expense,  as  before 50,000  2.28 

Total $3.87 


BASIS  OF  MINE  VALUATION  61 

On  this  basis,  the  value  of  the  ore  reserves  is :  . 

10,000  tons,  broken  in  stopes,  as  before $22,800 

100,000  tons,  ready  for  stoping,   at  $3.25    ($2.28  +  970.) 

per  ton  325,000 

.50,000  tons  ore,  reasonably  to  be  expected,  at  $3.87 193,500 


Total  charges    $541,300 

The  gross  recoverable  value,  as  before 841,600 

Profits  in  reserves 300,300 

The  differences  shown  clinch  the  statement  with  which 
this  paper  opened. 

As  a  summary  of  the  above  there  are  two  general  prin- 
ciples to  be  enunciated : 

(A)  Cost  per  ton  is  the  quotient  of  total  cost  divided 
by  the  actual  tonnage  resulting  from  that  expenditure. 

(B)  Net  value  per  ton  is  the  gross  recoverable  value 
per  ton,  less  cost  per  ton  for  those  natural  divisions  of 
the  work  still  to  be  performed  upon  the  different  classes 
of  ore. 

Although  the  above  principles  are  fundamental,  like 
all  general  statements  they  may  easily  be  pressed  to  ex- 
tremes, and  it  is  for  the  engineer,  after  analysis  of  the 
situation,  to  decide  the  particular  extent  of  their  applica- 
tion ;  a  failure  to  recognize  them  at  all,  on  the  other 
hand,  may  invalidate  the  conclusions  drawn  from  other- 
wise reliable  work. 


MINE    ACCOUNTS 

(August  29,  1903.) 

The  Editor: 

SIR — The  concise  and  creamy  presentation  of  the  im- 
portant subject  of  gold  mine  accounts  by  Mr.  H.  C. 
Hoover  in  a  recent  number  of  the  JOURNAL"  leaves  me 
little  chance  to  get  a  good  hold.  But  the  necessity  for 
discussion  of  an  issue  of  such  vital  mornent  to  the  mining 
industry  leads  me  to  venture  some  contribution  at  this 
juncture. 

Mr.  Hoover  does  yeoman  service  by  shutting  off  at  the 
outset  the  puerile  plea  of  diverse  conditions,  which  has 
too  often  been  the  excuse  for  such  woeful  chaos  as  greets 
the  investigator  when  he  begins  to  attempt  the  arranging 
of  actual  methods  into  some  show  of  system.  The  difficul- 
ties in  the  way  of  uniformity  lie  mainly  in  theory  and  not 
in  practice,  arising  not  from  varying  conditions,  so  much 
as  from  lack  of  method  or  of  clean-cut  ideas  concerning 
the  ends  to  be  sought  in  systems  of  account.  I  presume 
that  many  engineers  will  smile  at  this  statement,  at  first 
glance,  because  there  can  be  no  serious  difference  of  opin- 
ion among  well  trained  members  of  the  profession  as  to 
what  ought  to  be  shown  by  the  books.  But,  unfor- 
tunately, the  t  enforced  examination  of  the  accounts  of 
many  companies  proves  to  the  writer  the  very  inadequate 
manner  in  which  the  expected  information  is  obtainable, 
save  in  exceptional  instances. 

Mr.  Hoover  lays  down  three  methods,  or  principles, 
which  should  govern  a  proper  system  of  accounts.  In  my 
own  practice,  I  have  always  recommended  such  measures 
as  would  ensure  these  same  results,  but,  perhaps,  from  an 
attitude  not  exactly  similar. 

i.  "To  prevent  fraud      *     *     *     and  to  carry  convic- 

'Page  44,  July  n,  1903. 


MINE  ACCOUNTS  63 

tion  of  honesty."  This  practically  requires  the  keeping 
of  all  records  and  the  summarizing  of  the  same  in  such 
manner  as  to  ensure  adequate  checking  of  one  officer  by 
another.  This  not  only  guards  against  fraudulent  intent, 
but  it  also  protects  servants  by  verifying  their  records  be- 
fore the  opportunity  to  correct  possible  errors  has  passed. 

2.  "To  show  expenditure      *       *       *       on  some  unit 
basis,  etc."    This  important  end  can  be  accomplished  only 
by    the    most    detailed    accumulation    of    data    from    all 
sources,  and  this  is  the  direction  in  which  looseness  is 
most   commonly   discerned.     Discrepancies   arise   not   so 
much   from  misconception  or  differences  of  opinion  on 
methods  of  segregation,  as  from  inability  to  comprehend 
the  correct  principles  underlying  mine  accounts. 

3.  "To  be  presented  in  such  a  way  that  the  owner,  di- 
rector, shareholder,  or  what  not,  may    *    *    *    determine 
something   of   the   efficiency    of   the    manager   himself" 
Here  is  a  subject  which  demands  careful  handling.    The 
best  system  of  accounts  for  a  given  business  is  one  capa- 
ble of  yielding  minute  cost  analyses  at  the  hand  of  an  ex- 
pert, but  at  the  same  time  adapted  to  comprehensive  sum- 
marizing for  home  office  use.     Some  companies  sacrifice 
everything  else  to  fancied  economy,  by  gathering  only 
totals  in  the  accountant's  .books,  thus  rendering  very  diffi- 
cult the  task  of  analyzing  costs.    On  the  other  hand,  not  a 
few  accumulate  details  in  such  heterogeneous  fashion  as 
to  make  it  impossible  to  readily  obtain  grouped  footings 
when  required. 

The  British  system,  if  we  may  properly  apply  this  term 
to  anything  at  all,  has,  I  think,  developed  a  morbid  ten- 
dency to  extreme  simplification  of  the  general  ledger  ac- 
counts. Mr.  Nicol  Brown  has  finally  evolved  a  plan  by 
which  four  main  accounts,  with  chiefly  annual  or  monthly 
entries,  carry  nearly  all  of  the  business,  in  lump.  But 
this  necessitates  a  voluminous  and  complicated  system  of 
schedules  to  be  made  up  from  departmental  reports,  and  in, 


64  THE  ECONOMICS  OF  MINING 

many  respects  the  scheme  is  more  cumbersome  than  is 
acceptable  to  American  usage. 

In  Mexico,  a  plan  devised  for  the  Compania  Metal- 
lurgica  and  in  use  elsewhere  in  that  country  in  more  or 
less  modified  form,  has  features  which  overcome  some  of 
the  objections  to  the  British  style.  The  principle  is  to 
carry  on  the  general  ledger  a  moderate  number  of  promi- 
nent accounts,  to  which  totals  are  posted  from  journal 
and  cash  book,  using  a  subsidiary  ledger  to  take  up  item- 
ized segregations  which  may  be  specialized  to  any  extent 
deemed  desirable.  With  this  system,  the  accounts  are 
numbered  serially  and  all  employees  concerned  are  pro- 
vided with  printed  books,  giving  the  complete  classifica- 
tion by  numbers  and  titles.  In  adapting  it  for  use  in  one 
instance,  we  have  arranged  the  general  ledger  to  furnish 
information  ordinarily  liable  to  be  required  by  the  home 
office,  which  receives  the  monthly  trial  balance.  A  quar- 
terly report  of  audit  of  the  books  also  goes  to  the  home 
office,  with  an  analysis  of  costs,  made  independently  by 
the  consulting  engineer.  The  subsidiary  ledger  furnishes 
the  material  at  once  for  such  analysis.  But  the  important 
point  with  this,  as  with  any  system  of  accounts,  is  the 
manner  in  which  the  records  are  kept  and  assembled  for 
entry  in  the  accountant's  books. 

I  do  not  know  that  it  is  fair  to  talk  of  an  American 
system  of  mine  accounts,  only  we  may  note  the  trend  of 
practice  in  the  United  States  to  be  toward  labor-saving 
devices  in  book-keeping.  The  standard  card  systems, 
filing  cases  and  automatic  devices  are  mostly  flexible  and 
well  adapted  to  the  gathering  of  data  and  their  preserva- 
tion in  convenient  form  of  study.  But  comparatively  little 
has  thus  far  been  done  towards  applying  these  aids  in 
mine  accounts.  The  writer  has  used  such  appliances  for 
several  years,  under  a  variety  of  conditions,  and  always 
with  success.  The  real  work  consists  in  preparing  the 
forms.  After  that  the  system  almost  works  itself,  and 


MINE  ACCOUNTS  65 

even  prejudiced  persons  soon  come  to  esteem  the  method 
and  to  operate  it  with  keen  satisfaction. 

If  it  be  possible  to  formulate  a  standard  system  of 
accounts  adaptable  to  all  needs  and  so  planned  as  to 
give  comparable  results  as  between  different  operators 
I  take  it  that  some  agreement  must  be  reached  regard- 
ing a  number  of  points  on  which  practice  now  differs. 
These  matters  once  adjusted,  it  would  be  wise  to  pre- 
pare a  skeleton,  which,  on  broad  lines,  should  be  very 
simple  and  comprehensive  in  its  segregations.  Each 
main  division  ought  then  to  be  divided  and  sub-divided 
to  give  operators  free  choice  of  subsidiary  accounts. 

What  are  known  as  'Capital  accounts'  over  sea,  as 
distinct  from  cost  and  revenue  (profit  and  loss)  ac- 
counts, have  not  been  as  clearly  defined  in  American 
practice.  This  is  due  (i)  to  differences  in  tax  collectors' 
methods,  which,  on  this  side,  are  variable  and  rarely  in- 
trospective; (2)  to  the  difference  in  attitude  of  home  and 
foreign  investors;  (3)  to  different  methods  of  stock  dis- 
tribution here  and  there,  and  (4)  to  rigid  auditing  abroad 
and  the  sad  lack  of  it  at  home.  These  items,  however, 
need  only  be  stated  as  causes  historical,  and  not  as 
raisons  d'etres  in  the  premises.  Moreover,  Mr.  Hoover 
appears  to  have  found  his  discordant  elements  largely  in 
a  country  which  is  supposed  to  set  the  pace  for  us  to 
follow,  for  there  is  no  doubt  that  the  British  ideals  are 
beyond  and  above  us  in  their  appreciation  of  the  value 
of  accounts.  Once  let  the  spirit  move  us  to  'get  to- 
gether' in  the  matter,  I  venture  the  prediction  that  we 
will  evolve  a  system  less  cumbersome  and  unwieldy  to 
accomplish  the  end  in  view. 

Duly  crediting  Mr.  Hoover  with  the  original  sugges- 
tions that  the  Institute  of  Mining  and  Metallurgy  and 
the  American  Institute  of  Mining  Engineers  appoint  a 
joint  committee  to  formulate  some  plan  of  working  cost 
statements,  after  discussion  of  the  subject,  I  would 


66  THE  ECONOMICS  OF  MINING 

venture  to  suggest  a  modified  proposition,  as  follows : 
Let  the  Institute  of  Mining  and  Metallurgy  and  the 
Institution  of  Mining  Engineers  appoint  a  joint  com- 
mittee of  ten  (five  from  each  organization)  to  act  as  a 
British  sub-committee  to  correspond  and  collect  quali- 
fied opinions  from  their  membership,  and  to  classify  the 
same,  with  recommendations.  Let  the  American  Insti- 
tute of  Mining  Engineers  appoint  a  similar  committee 
of  ten  to  act  independently  on  this  side  in  the  same 
manner  and  with  a  similar  purpose.  After  a  given  pe- 
riod of  deliberation,  let  each  committee  of  ten  select 
from  its  own  membership  two  persons  to  form  a  new 
committee  of  four,  to  be  charged  with  the  duty  of  devel- 
oping a  plan  from  the  final  reports  of  the  larger  com- 
mittees. Meanwhile,  the  free  discussion  of  the  subject 
in  all  its  bearings  need  not  be  restricted  in  any  degree. 

I  respectfully  submit  this  first  draft  of  a  plan  which 
may  well  be  modified  in  detail  by  wiser  heads.  The  prin- 
ciple of  the  idea  is  one  which  might  also  be  applied  to' 
many  other  topics  of  interest;  and  the  fact  that  many 
mining  engineers  are  now  enrolled  in  the  respective  insti- 
tutions on  both  shores  suggests  the  propriety  of  establish- 
ing one  or  more  joint  standing-committees  on  general 
issues. 

In  the  United  States  we  have  not  been  accustomed 
to  draw  the  somewhat  arbitrary  distinction  which  is 
made  abroad  between  'gold  mine  accounts'  and  mine 
accounts  in  general.  The  former  require  in  reality 
but  the  simple  framework  about  which  may  be  built 
up  the  more  complicated  systems  rendered  necessary 
by  products  requiring  amplified  processes.  But,  if  the 
necessity  exists  for  standard  specifications  in  the  one 
case,  so  much  the  more  are  they  called  for  in  the  busi- 
ness of  mining  and  treating  complex  ores. 

The  differences  in  modes  of  writing  up  particulai 
items,  as  mining  development,  etc.,  with  other  varia- 


MINE  ACCOUNTS  67 

tions  in  practice  mentioned  by  Mr.  Hoover,  also  the 
questions  raised  by  your  London  correspondent,  in  an 
article  in  the  sasme  isue  of  the  JOURNAL/  all  serve  to 
show  the  present  lack  of  uniformity  in  method.  To 
some  extent,  it  may  be  feared  that  corresponding  dis- 
crepancies in  purpose  may  also  be  discernible.  I  can 
only  add  at  this  writing  that  my  own  practice  has  en- 
countered somewhat  equivalent  diversity  of  need  in 
varying  circumstances.  But  the  general  plan  which 
covers  the  systems  adopted  is  susceptible  of  adjustment 
to  these  several  requirements,  and  the  books  of  any 
corporation  using  the  method  will  yield  cost  analyses  of 
a  typical  form,  however  much  the  details  may  thus  be 
modified.  Whether  the  particular  type  form  is  the  best 
for  all  uses,  and  how  nearly  this  plan  will  approximate 
the  standard  to  be  finally  adopted,  are  very  open  ques- 
tions. It  is  to  be  hoped  that  the  whole  subject  will  be 
amply  discussed  with  a  view  to  the  eventual  adoption 
of  definite  standards  by  the  profession  at  large. 

THEO.  B.  COMSTOCK. 
Los  Angeles,  Cal.,  August  14,  1903. 


a  The  Payment  of  Extensions  of  Mining  Plant  Out  of  Reve- 
nue/ by  E.  Walker,  this  JOURNAL,  p.  48,  July  n,  1903. 


ORE-BREAKING  AND  SORTING  ON  THE 
RAND* 

BY  H.  S.  DENNY. 

(September   19,    1903.) 

In  all  the  mines  on  the  Rand  the  ore  before  being 
sent  to  the  surface  is  regulated  to  a  certain  maximum 
gauge  by  an  arrangement  of  sizing  bars  fixed  over  the 
station  bins  at  the  shafts.  The  object,  primarily,  is 
to  reduce  the  largest  pieces  of  ore  to  such  a  gauge 
that  there  will  be  no  liability  to  choke  the  outlet  from 
the  bin;  but  it  serves  also  the  secondary  and  equally 
important  purpose  of  preventing  rocks  of  too  great  a 
size  from  passing  to  the  ore-sorting  house. 

The  ore  when  delivered  at  the  surface  is  usually  clas- 
sified into  'fine'  and  'coarse  rock'  by  dumping  the 
skipload  onto  a  grizzly  in  the  headgear;  the  fine,  being 
unsortable,  go  direct  to  the  mill,  and  the  coarse  ore  is 
sent  to  the  sorting  house. 

The  rock  in  the  sorting  house  is  subjected  to  scrutiny 
either  on  floors,  revolving  tables  or  traveling  belts,  and 
the  rejected  waste  goes  to  the  dump.  The  sorted  ore  is 
fed  into  ore-breakers  for  further  reduction. 

The  breakers  may  be  classified  into  two  generic  types, 
the  gyratory  and  the  crank  motion  type,  the  former  be- 
ing largely  represented  by  the  Gates  and  the  latter  by 
the  Blake  machine.  Each  type  has  its  supporters,  but 
it  is  generally  considered  by  the  moderates  that  the 
former  is  the  better  machine  when  unit  capacity  is  de- 
manded, and  the  latter  when  multiplication  of  machines 

*  Abstract  from  advance  sheets  of  paper  entitled  'Observations 
on  the  Metallurgical  Practice  of  the  Witwatersrand,'  by  H.  S. 
Denny,  read  before  the  Chemical,  Metallurgical  and  Mining  Soci- 
ety of  South  Africa. 


ORE-BREAKING  AND  SORTING  69 

is  not  embarrassing  to  the  general  design,  as  its  mainte- 
nance cost  is  less. 

The  general  scope  of  the  rock-breaker  is  to  reduce  the 
ore  to  about  a  2-in.  cube  before  delivering  to  the  mill, 
but  the  average  in  the  mill-bins  will  be  found  to 
exceed  this  gauge,  owing  to  wear  in  the  crushing  part  of 
the  breakers.  In  the  most  recent  practice  it  is  recog- 
nized that  there  is  an  advantage  gained  by  subjecting 
the  ore  to  a  preliminary  breaking;  that  is,  to  reduce* its 
size  before  passing  it  to  the  sorting  house  in  order  that 
there  may  be  closer  uniformity  in  the  sizes  of  the  pieces 
of  ore  that  are  subjected  to  the  sorting  operation. 

It  is,  I  think,  doubtful  whether  the  practice  of  ore  re- 
duction in  breakers  is  carried  sufficiently  far.  It  would 
appear  that  a  material  increase  may  be  obtained  in  the 
stamp  duty  if  there  were  a  succession  of,  say,  three 
breakers,  each  reducing  the  ore  to  smaller  gauge  than 
the  last,  until  the  final  product  did  not  exceed  an  aver- 
age of,  say,  half-inch  cubes. 

The  line  of  demarkation  defining  the  point  where 
ordinary  breaking  should  cease  and  milling  begin,  has 
never  yet  been  accurately  determined,  and  this  limit 
should  be  ascertained  by  actual  experiment. 

Recently  there  has  been  much  discussion  regarding 
the  question  of  sorting,  and  in  some  particular  cases 
where  sorting  had  been  practiced  hitherto  it  has  been 
decided  to  abandon  the  operation,  as  it  is  claimed  that 
more  favorable  results  can  be  obtained  without  it.  There 
are  many  aspects  of  this  question  which  lend  themselves 
to  conflicting  conclusions,  but  that  there  are  some  cases 
in  which  the  operation  is  highly  beneficial,  there  can  be 
no  doubt.  To  say  that  sorting  is  an  operation  that 
should  apply  to  every  proposal  is,  in  substance,  to  claim 
that  the  same  conditions  are  presented  in  each  case. 
This  we  know  is  not  so,  and,  consequently,  the  opera- 
tion will  more  particularly  apply  to  one  case  than  to  an- 


70  THE  ECONOMICS  OF  MINING 

other,  and  there  will  be  limits  at  which  it  will  reach  its 
highest  efficiency  and  its  lowest. 

I  propose  to  take  a  case  representative  of  certainly  the 
majority  of  the  mines  on  the  Witwatersrand,  and  will  deal 
with  it  both  on  a  sorting  and  a  non-sorting  basis. 

Assume  that  we  have  a  mill  of  100  stamps,  a  property 
of  100  claims  and  40,000  tons  per  claim.  The  total  ton- 
nage would  be  4,000,000  tons.  Suppose  each  ton  of  ore 
delivered  at  surface  to  have  the  following  value:  50  per 
cent  fine,  12  dwt.  per  ton;  50  per  cent  coarse  rock,  12 
dwt.;  100  tons  contain  1,200  dwt.,  worth,  at  $1.008  per 
dwt.,  $1,209.60,  equal  to  $12.096  per  ton.  Without  sort- 
ing we  get,  say,  80  per  cent  extraction,  equal  to  $967.68, 
from  100  tons ;  that  is,  $9.676  per  ton.  Assume  costs  at 
$5.76  per  ton,  divided  as  follows  i1 

Mining    $2.52  per  ton  milled  (15,000  tons)  $37,800 

Crushing   0.12 

Milling    0.60 

Cyaniding   0.60        "  "  " 

Slime  handling 0.12 

General    0.72 

Head  office 0.36 

Mine-development  re- 
demption      0.72        "  "  " 


$5-76 

Leaving  a  profit  of  $3.916. 

One  hundred  heavy  stamps  crush  500  tons  per  day,  or 
15,000  tons  per  month,  equal  to  180,000  tons  per  annum. 
Life  of  mine  equal  to  22.2  years.  The  net  profit  made  in 
that  period  is  4,000,000  tons  at  $3.916  per  ton,  equal  to 
$15,664,000.  The  present  value  of  that  amount  at  5  per 
cent  compound  interest  is  $5,470,663.73.  (In  this  calcu- 
lation I  have  not  allowed  for  amortization  of  capital.) 

With  20  per  cent  sorting  we  have  the  following  state- 
ment :  50  tons  fine  at  12  dwt.,  equal  to  600  dwt.  From  the 
remaining  50  tons,  containing  600  dwt.,  we  discard  20 

1  In  these  calculations  the  £i  sterling  is  taken  at  $4.80;  i  shilling 
at  24  cents. 


ORE-BREAKING  ON  THE  RAND  71 

tons  carrying  2  dwt.,  equal  to  40  dwt.,  leaving  560  dwt. 
contained  in  30  remaining  tons.  We  thus  have  80  tons  of 
ore  containing  600  plus  560,  equal  to  1,160  dwt.,  equal  to, 
at  $1.008  per  dwt,  $1,169.28,  equal  to  $14.616  per  ton; 
80  per  cent  extraction  equal  to  $11.694  per  ton. 

The  costs  in  this  case  would  be  as  follows : 

Mining   $3. 15  per  ton  milled  (15,000  tons)  $47,250 

Crushing  0.12  1,800 

Sorting  0.12  1,800 

Milling    0.60  9,000 

Cyaniding   0.60  9,000 

Slime   handling 0.12  '                             .                     1,800 

General    0.84  '            «'                                  12,600 

Head   office 0.48  '                                                 7,200 

Mine-development  re- 
demption      0.90  "            "                   "               13,500 


$6.93  $103,950 

It  might  be  argued  that  mining  costs  should  be  taken 
lower  in  this  case  as  against  the  first,  seeing  that  the  fair 
proportion  of  general  charges  is  spread  over  the  larger 
tonnage  mined.  The  statement  would  leave  a  profit  of 
$4.764  per  ton  milled;  18,750  tons  per  month,  equal  to 
225,000  tons  per  annum ;  life  of  mine  equal  to  17.7  years ; 
tons  milled  equal  to  3,200,000,  at  $4.764  per  ton;  net 
profit  equal  to  $15,244,800  earned  in  17.7  years.  The 
present  value  of  that  amount  is  $6,429,644,  or  a  difference 
in  favor  of  sorting  of  $958,980.  In  this  comparison'  we 
have  the  same  sized  plant  milling  the  product  of  18,750 
tons  mined  in  the  one  case  as  against  15,000  tons  in  the 
other. 

Against  the  extra  cost  of  mining  to  produce  15,000 
tons  for  the  mill  when  sorting,  we  have  the  extra  cost  of 
milling,  handling  and  treating  the  extra  sand  and  slime 
which  we  should  have  to  incur  without  sorting.  It  must 
not  be  forgotten,  too,  that  in  the  case  of  non-sorting,  every 
ton  of  waste  rock  has  to  be  provided  with  10  tons  of 
water,  and  the  cost  of  up-keep  and  cleaning  out  of  slime 
pits  will  be  increased  by  reason  of  the  extra  tonnage.  I 


72  THE  ECONOMICS  OF  MINING 

have  assumed  the  cost  of  milling  to  be  the  same  in  both 
cases.  The  only  extra  capital  expenditure  for  the  case  in 
which  we  adopt  sorting,  is  the  sorting  plant.  It  has  been 
argued  that,  if  the  mill  capacity  were  increased  to  an  ex- 
tent sufficient  to  cope  with  the  extra  tonnage,  this  would 
be  more  economical  than  sorting. 

Taking  the  cases  above  cited,  we  must  increase  to  3,750 
tons  more;  as  one  stamp  will  crush  150  tons  per  month, 
this  is  equal  to  25  stamps  more.  With  the  increased  ton- 
nage working  costs  might  be  reduced  to,  say,  $5.28;  but 
a  -corresponding  increase  in  the  mill  when  sorting  would 
also  show  reduced  working  costs,  and  therefore  the  com- 
parison would  only  increase  the  favorable  aspect  for 
sorting. 

The  rock  discarded  I  have  estimated  at  2  dwt.  in  value, 
$2.016  per  ton.  We  get  80  per  cent  extraction  from  this, 
equal  to  $1.613.  It  has  to  be  crushed,  I2c. ;  milled,  6oc. ; 
cyanided,  6oc. ;  converted  into  slime  and  handled,  I2c. ; 
total  $1.44;  and  the  margin  in  profit  would  not  cover  its 
share  in  depreciation  of  plant  and  the  loss  of  water  in- 
volved, while  at  the  same  time  it  is  preventing  the  treat- 
ment of  more  valuable  ore  if  sorted ;  and  all  this,  too,  on 
the  assumption  that  its  corresponding  residue  would  only 
be  0.4  dwt.,  and  nothing  in  the  slime,  whereas,  it  is  prob- 
able that  the  sand  residue  and  the  slime  from  it  would  be 
the  same  as  the  rest  of  the  ore,  and,  therefore,  more  than 
0.4  pennyweight. 

I  am  presupposing  in  these  illustrations  that  20  per  cent 
sorting  is  not  only  possible,  but  easy  of  actual  fulfillment. 
There  are,  however,  many  variations  in  the  cases  to  which 
sorting  is  applied,  and  each  case  must  be  judged  on  its  in- 
dividual merits.  These  variations  may  be  expressed  as 
lying  mainly  in  the  factor  of  reef  thickness. 

For  instance,  on  a  reef  3  in.  thick,  where  the  stopes 
average,  say,  42  in.,  the  reef  matter  in  every  ton  of  ore 
mined  is  only  7  per  cent,  and,  assuming  that  we  have  50 


ORE-BREAKING  ON  THE  RAND  73 

tons  of  fine,  containing  3^  tons  of  reef,  we  have  50  tons 
of  coarse  rock  containing  the  same  proportion.  In  such 
instances  it  might  be  possible  to  sort  40  tons  of  waste  rock 
in  every  100  tons  from  the  mine. 

On  the  other  hand,  we  may  have  12  ft.  of  reef  matter, 
of  which  we  mine,  say,  the  central  8  ft.,  and  as  the  whole 
of  our  product  would  be  reef,  no  sorting  would  be  pos- 
sible. 

These  are  two  extreme  cases,  and  between  their  limits 
will  occur  the  variations  between  nothing  and  50  per  cent 
sorting. 

I  have  thus  far  assumed  50  per  cent  as  representing 
the  average  percentage  of  fine  in  ore  from  the  mine,  but 
naturally  there  are  important  variations'  in  this  factor 
dependent  directly  on: 

(1)  Setting  of  grizzly  bars. 

(2)  Method  of  stoping. 

(3)  Nature  of  ground. 

If  machines  are  used  exclusively  for  stoping,  the  per- 
centage of  the  fine  will  be  high,  while  if  hand  labor  only 
is  used  the  percentage  will  be  low.  On  many  mines  a 
combination  of  the  two  is  resorted  to ;  30  per  cent,  how- 
ever, represents  about  the  minimum  and  60  per  cent  the 
maximum,  and  something  between  the  two,  say  40  to  50 
per  cent,  will  be  the  average. 

With  50  per  cent  fine  it  is  necessary  to  carry  out  an 
actual  50  per  cent  table-sorting  to  represent  25  per  cent 
on  the  tonnage  mined. 

On  the  above  showing  it  is  clear  that,  where  it  is 
possible  to  sort  out  waste  rock  of  an  average  value  of 
2  dwt,  it  is  a  highly  profitable  proceeding.  It  is 
possible,  however,  to  sort  too  little  or  too  much.  On  a 
3-in.  reef,  with  a  4-ft.  stope  and  40  per  cent  fine,  20 
per  cent  sorting  would  be  far  too  low,  while  on  3-ft. 
reefs  and  4-ft.  stopes,  allowing  50  per  cent  fine,  20  per 


74  THE  ECONOMICS  OF  MINING 

cent  would  be  far  too  high,  and  the  average  value  of  the 
discarded  rock  would  reflect  this. 

Each  case  must,  as  before  stated,  be  figured  out  on 
the  particular  circumstances  regarding  reef  and  stope 
thicknesses  which  obtain. 

In  some  cases  on  the  Witwatersrand  I  have  heard  it 
argued  that  the  quartzites  immediately  overlying  or  un- 
derlying the  reef  carry  sufficient  gold  to  make  their 
treatment  profitable,  but  I  have  not  met  any  such  cas£s 
personally,  excepting  in  some  isolated  sections,  where 
the  occurrence  is  too  limited  to  influence  the  general 
question. 

Naturally  the  object  of  sorting  is  to  discard  rock 
which  cannot  be  treated  profitably,  and  if  the  value  of 
the  waste  rock  at  any  time  exceeds  this  limiting  factor, 
then  the  operation  is  done  at  a  loss.  That  limit  will  vary 
according  to  conditions,  and  must  be  computed  inde- 
pendently for  each  proposition. 

It  is  not  an  easy  matter  to  arrive  at  the  value  of  waste 
rock.  I  know  of  no  method  of  sampling  in  vogue  to- 
day which  could  be  called  accurate.  The  best  check  on 
the  work  is  the  recovery  set  against  the  value  in  the 
mine,  and  the  discretion  of  the  manager  must  be  relied 
upon  to  see  that  there  is  a  proper  correspondence  be- 
twen  these  two  points. 

There  are  methods  which  suggest  themselves  cer- 
tainly, and  of  these,  either  of  the  two  following  might 
be  adopted: 

(1)  A  certain  percentage,  or  even  the  whole  of  the 
waste    rock    coming    from    the    sorting    plant,    to    be 
passed  through  a  set  of  two  or  more  breakers  and  re- 
duced fine  enough  to  be  sampled.  Samples  to  be  taken 
constantly  over  a  period  of  one  month  and  the  opera- 
tion to  be  repeated  every  few  months. 

(2)  Five  or   10  stamps  to  be  occasionally  set  aside 
entirely  for  waste  rock,  and  the  crushed  product  to  be 


ORE-BREAKING  ON  THE  RAND  75 

treated  independently  of  the  ore  passing  through  the  re- 
mainder of  the  mill. 

Of  these  two  alternatives  the  first  is  the  more  feasi- 
ble, although  the  second  is  undoubtedly  the  more  accu- 
rate, but  the  expense  attaching  to  the  latter  method 
prohibits  it.  If  a  mine  is  not  in  a  position  to  keep  its  full 
mill  going,  it  might  use  some  of  the  idle  stamps  for  this 
purpose,  and  instead  of  treating  the  resultant  pulp  sep- 
arately, simply  take  a  careful  series  of  screen  samples. 

Another  point  (which  has  arisen  and  which  bears  very 
directly  on  our  present  condition  wherein,  owing  to 
shortage  of  labor,  we  are,  in  some  cases,  able  to  mine 
only  sufficient  ore  to  feed  a  portion  of  our  battery)  is 
whether  it  is  not  of  greater  advantage  to  run  the  whole 
mill  on  unsorted  ore  than  to  adopt  sorting  and  keep 
stamps  lying  idle. 

Take  the  case  of  a  mine  equipped  with  100  stamps, 
where  only  500  tons  of  ore  can  be  milled  per  day.  If 
25  per  cent  sorting  is  adopted  only  75  stamps  can  be 
run,  whereas  without  sorting  the  full  mill  could  be  kept 
running. 

Assume  the  ore  consists  of  50  per  cent  coarse  rock 
and  50  per  cent  fine,  and  is  worth,  delivered  at  surface, 
14  dwt,  and  that  we  secure  80  per  cent  recovery  in 
either  case,  and  that  the  waste  rock  discarded  in  the 
case  of  sorting  is  2  dwt.,  we  then  have  the  following 
comparative  statement: 

Case  for  Sorting — 

100  stamps  will  crush  500  tons  of  ore  per  day. 

250  tons  fine  at  14  dwt 3,5oo  dwt. 

125  tons  sorted  ore  at  26  dwt 3,250  dwt. 

Total  375  tons  of  ore  at  18  dwt 6,750  dwt. 

Eighty  per  cent  of  18  dwt.  amounts  to  14.4  dwt.  at 
$1.008,  equal  to  $14.515  recovery. 

Expenditure — 

Mining $3-36  per  ton  milled  (375  tons)  $1,260 

Crushing  0.12        "  45 


76  THE  ECONOMICS  OF  MINING 

Sorting  0.12  per  ton  milled  (375  tons)     $45 

Milling   0.60  225 

Cyaniding   0.60  225 

Slime  handling 0.12  45 

General    0.84  "              "                315 

Head   office 0.48  180 

Mine  -  development       re- 
demption    0.96        "  "                360 


$7.20  $2,700 

Profit  $7.315  per  ton,  equal  to  $2,743,125. 

Case  for  Non-Sorting — 

Five  hundred  tons  at  14  dwt.  equal  to  7,000  dwt.,  80 
per  cent  of  14  dwt.  equal  to  11.2  dwt.  at  $1.008,  equal  to 
$11.289  per  ton. 

Expenditure — 

Mining $2..  52  per  ton  milled  (500  tons)  $1,260 

Crushing   0.12 

Milling    0.60 

Cyaniding   0.60 

Slime  handling o.  12 

General o .  72 

Head   office 0.36 

Mine  -  development       re- 
demption   o. 72        "  "  "  u  360 


60 
300 
300 

60 
360 
180 


$5.76  $2,880 

Profit  $5.529  per  ton;  500  tons  at  $5.529  equal  to 
$2,764.50.  Difference  in  favor  of  non-sorting,  $21.375. 

In  the  latter  case,  however,  there  is  an  extra  charge 
for  loss  of  water  and  for  depreciation  of  the  extra 
stamps  to  be  run,  and  if  these  allowances  be  made  there 
is  in  the  comparison  above  made  remarkably  little  dif- 
ference. 

The  whole  issue  hinges  finally  on  the  value  of  the 
rock  discarded.  If  that  value  is  only  i  dwt.,  then  sort- 
ing will  prove  advantageous,  but  if  we  allow  3'  dwt.  for 
the  waste  rock,  then  it  would  pay  to  run  the  idle  stamps, 
and  it  is  on  the  determination  of  this  factor  that  the 
policy  adopted  must  be  guided. 

This  comparison  must  in  no  way  be  confused,  how- 
ever, with  the  question  raised  in  the  first  illustration  in 
which  the  tonnages  crushed  are  equal. 


MINING  INVESTMENT 

(Editorial,  September  26,   1903.) 

Our  friend  Mr.  J.  H.  Curie  has  been  writing  a  series 
of  useful  articles  in  the  London  Economist;  his  utterances 
have  been  couched  in  very  plain  language,  and  have 
conveyed  a  large  measure  of  unadorned  fact  intended 
obviously  to  puncture  some  of  the  filmy  sophistries 
which  obscure  the  business  of  mining.  Finally,  at  some 
one's  suggestion,  he  has  given  the  readers  of  The 
Economist  a  dose  of  advice  which  summarizes  a  good 
deal  of  what  he  has  previously  said.  With  the  general 
tenor  of  these  obiter  dicta  we  do  not  quarrel;  on  the 
contrary,  we  welcome  the  introduction  of  so  much  good 
sense  into  mining  matters,  and  congratulate  the  author 
on  the  excellent  results  likely  to  accrue  from  his  out- 
spoken ratiocinations.  However,  as  we  ourselves  live  in 
a  country  where  mining  is  still  young  and  hopeful,  with 
some  of  the  exaggerations  of  youth  but  with  all  of  its 
vigor,  we  take  exception  to  certain  of  his  conclusions. 
The  latter  undoubtedly  suffer  from  brevity;  unqualified 
generalizations  are  rarely  impregnable,  and  in  this  case 
they  are  obviously  endangered  by  the  enormous  range 
of  conditions  covered  by  the  mining  regions  of  the  world. 
Mr.  Curie  says:  "Don't  invest  in  copper,  tin  or  silver- 
lead  mines,  but  stick  to  gold  mines."  Of  course,  this 
advice  is  intended  not  for  mining  operators  or  well- 
informed  people,  but  for  the  average  investor,  who,  like 
an  innocent  child,  is  supposed  to  wade  on  the  edge  of 
the  sea  of  financial  speculation.  "Gold  has  a  fixed 
value,"  he  goes  on  to  say,  "whereas  violent  fluctuations 
in  the  prices  of  other  metals  upset  all  estimates  of  the 
earning  capacity  of  the  mines  producing  them."  Why, 
then,  should  one  not  avoid  risk  of  any  kind  and  buy 


78  THE  ECONOMICS  OF  MINING 

Consols  or  United  States  bonds,  or  conservative  bank 
stock  or  debentures  of  the  most  gilt-edged  variety? 
Why?  Simply  because  people  who  go  into  mining  do 
so  because  they  want  a  bigger  return  for  their  money 
and  expect  to  get  the  benefit  of  a  speculative  enhance- 
ment of  their  principal.  Bring  mining  to  the  strictly  in- 
vestment basis  of  which  Mr.  Curie  writes  so  much,  and 
it  shrivels  to  feeble  dimensions  indeed.  The  investor 
who  wants  to  eliminate  all  risk  in  mining  is  like  a  man 
who  expects  to  go  bathing  without  getting  wet.  Such 
ideas  entirely  misinterpret  the  spirit  of  legitimate  mining. 
What  shareholder,  we  would  ask,  wants  to  forego  en- 
tirely all  the  possibility  of  favorable  development  or  of 
new  discovery?  It  is  the  chance  of  enhancing  the 
value  of  his  holding  which  gives  zest  to  the  business 
of  mining.  Such  possibility  of  further  discovery  entails 
inevitably  the  equal  possibility  of  disappointment;  the 
uncertainty  cannot  be  all  in  one  direction.  In  other 
words,  the  mining  investor  only  asks  that  he  may  get 
'a  run  for  his  money.'  In  Cornwall  shareholders  are 
known  as  'adventurers/  not  with  the  modern  meaning 
of  irresponsible  schemers,  but  with  the  old  Elizabethan 
idea  of  men  who  go  on  a  venture,  take  a  reasonable  risk, 
and  are  hopeful  of  a  favorable  return. 

Mr.  Curie  has  expressed  great  respect  for  the  good 
sense  of  American  engineers  and  mine  operators;  we 
feel  safe  in  saying  that  these  men  heartily  disagree  with 
any  such  sweeping  statements  as  the  foregoing  in  re- 
gard to  mines  producing  metals  other  than  gold.  Of 
course,  when  the  product  of  a  mine  is  liable  to  fluctuation 
in  market  value,  the  purchaser  of  it,  or  the  stockholder, 
will  expect  a  larger  dividend  to  compensate  for  the 
added  risk.  Markets  vary;  even  the  purchasing  power 
of  gold  is  not  constant;  but  the  conclusion  is  not  to  try 
to  get  rid  entirely  of  an  essential  factor — risk — but  to 
require  a  proportionate  return  in  the  rate  of  interest. 


MINING  INVESTMENT  79 

There  are  many  of  our  readers,  we  feel  assured,  who,  if 
asked  to  choose  between  a  gold  mine  yielding  a  small 
rate  of  interest  with  but  little  risk  (such  is  the  mine  Mr. 
Curie  recommends)  and  a  silver-lead,  copper  or  tin 
mine  with  a  larger  risk  but  with  a  bigger  return  for  their 
money,  will  select  the  latter.  The  idea  that  all  gold 
mines  must  have  60  per  cent  of  their  market  valuation 
represented  by  net  profit  on  ore  in  reserve  and  must 
yield  10  per  cent  on  their  investment  price  is  the 
dream  of  a  doctrinaire.  A  few  such  mines  are  quoted 
on  the  exchanges,  and  they  exist  just  now  mainly  by 
reason  of  a  busted  bull  market  and  an  unusual  condition 
of  financial  depression.  When  better  times  return,  even 
these  shares  will  rise  to  a  figure  at  which  they  will  cease 
to  fulfill  the  requirements  which  Mr.  Curie  exacts;  and 
then  the  economist  of  The  Economist  will  have  a  theory 
with  visible  means  of  support. 


A  CARD  SYSTEM  FOR   MINE  ACCOUNTS* 

BY  F.  W.  DENTON. 

(September    26,    1903.) 

Since  the  first  of  the  present  year  a  card  system  has 
been  in  use  at  the  Baltic  copper  mine  in  connection  with 
the  general  supply  account.  The  system  has  proved 
satisfactory.  Two  sets  of  cards  are  employed.  One  set 
is  retained  in  the  supply  clerk's  office  and  is  kept  up  to 
date  by  him,  and  the  other  set -is  kept  in  the  main  office 
and  is  written  up  by  the  office  clerks.  The  cards  are  3 
by  5  in.  and  5  by  8  in.  respectively,  and  are  ruled  as 
shown.  The  difference  between  the  two  sets  is  as  fol- 
lows: On  the  supply  clerk's  card,  Fig.  I,  only  the  date, 
balance  on  hand,  quantity  received,  and  quantity  used 
are  recorded,  while  on  the  office  card,  Fig.  2,  all  of  these 
appear,  and  in  addition  the  initials  of  the  firm  supplying 
the  goods,  cost,  value  of  amounts  consumed  and  the  ac- 
counts to  which  the  supplies  are  charged. 

The  method  of  using  the  cards  is  as  follows:  When 
the  duplicate  bills  for  supplies  are  received  one  copy  is 
sent  to  the  supply  clerk,  who  checks  the  bill  and  enters 
the  quantities  on  his  cards.  As  supplies  are  issued  dur- 
ing the  month  a  memorandum  is  made  in  an  ordinary 
book  in  the  usual  manner.  At  the  end  of  the  month 
the  supply  clerk  prepares  from  his  memorandum  book 
two  reports,  one  of  which  is  arranged  according  to  the 
expense  accounts  and  the  other  according  to  the  kind 
of  supplies.  That  is,  on  one  report  under  each  expense 
account  will  be  put  all  of  the  supplies  charged  against 
that  account  for  the  month,  and  on  the  other  report, 

*  Paper  read  before  the  Lake  Superior  Mining  Institute,  August, 
1903. 


CARD  SYSTEM  FOR  MINE  ACCOUNTS     81 

under  the  name  and  size  of  each  article,  will  be  given  the 
total  consumption  of  that  article.  This  last  mentioned 
special  report  assists  the  office  force  in  writing  up  the 
office  cards.  These  reports  are  turned  over  to  the  gen- 
eral office. 

At  the  end  of  each  month,  when  all  of  the  supply  bills 
have  been  received  and  checked,  the  office  clerks  enter 
the  quantities  and  costs  on  the  proper  cards  and  compute 
a  new  average  price  if  necessary.  This  average  price 
may  be  computed  as  closely  as  desired. 

As  soon  as  the  pay-roll  is  finished  at  the  first  of  the 
following  month,  before  which  time  the  supply  clerk  will 
have  sent  in  his  two  reports,  the  office  force  takes  the  re- 
port of  the  supply  clerk  and  completes  the  entries  on 
the  office  cards.  The  special  report  of  the  supply  clerk, 
showing  the  total  amount  issued  of  each  kind  of  sup- 
plies, is  used  to  check  the  work  of  picking  out  the  in- 
dividual records  from  the  detailed  report  arranged  by 
accounts,  and  insures  all  entries  being  made  on  each 
card  at  the  same  time.  When  the  entries  are  finished 
on  a  card,  and  before  returning  the  card  to  the  drawer, 
the  respective  quantities  used  during  the  month  are 
multiplied  by  the  average  price  and  the  amounts  entered 
in  the  proper  column  on  the  card,  and  also  in  the  proper 
place  in  the  supply  clerk's  report.  The  balances  of 
quantity  and  value  are  then  brought  down  on  the  card, 
and  the  work  on  that  card  is  finished.  By  copying  the 
total  value  of  supplies  consumed  from  the  cards  to  the 
supply  clerk's  special  report  and  afterward  checking  the 
footing  of  this  report  with  that  of  the  detailed  report,  a 
good  check  on  all  the  clerical  work  but  the  multiplication 
is  obtained,  and  the  average  price  checks  that  near 
enough. 

The  values  having  been  obtained  in  this  way  for  the 
supply  clerk's  report,  the  main  function  of  the  card 
ceases  as  far  as  the  mine  books  are  concerned,  and  the 


82  THE  ECONOMICS  OF  MINING 

supply  clerk's  report  is  then  used  in  the  usual  manner. 
If  any  allowance  is  to  be  made  for  freight  and  other 
expense  connected  with  supplies  not  covered  by  the 
original  supply  bills,  such  allowance  can  be  made  by 
adding  a  certain  percentage  to  the  footing  on  the  sup- 
ply clerk's  report. 

At  the  Baltic  the  supply  account  on  the  ledger  will  in 
future  be  charged  with  the  amounts  of  the  supply  bills 
only,  and  credited  with  the  amounts  as  figured  from  the 
cards. 

The  cost  of  handling  supplies  to  and  from  ware- 
houses, the  cost  of  heating  and  lighting  these  buildings, 
and  any  other  expense  connected  with  the .  caring  for 
supplies,  are  all  charged  off  each  month  as  they  occur  to 
one  of  the  general  expense  accounts  under  the  name  of 
caring  for  supplies.  The  freight  bills  paid  each  month 
for  supplies  are  charged  off  the  same  month  to  the  vari- 
ous expense  accounts  in  proportion  to  the  values  of  the 
supplies  used  by  these  accounts.  This  method  of  hand- 
ling freight  and  other  expense  connected  with  supplies 
is  as  fair  as  any  other  in  general  use,  and  has  the  fol- 
lowing advantages:  First,  the  balance  shown  by  the  sup- 
ply account  on  the  ledger  should  check  with  the  balance 
shown  by  the  cards;  second,  by  keeping  the  expense  of 
caring  for  supplies  by  itself,  this  expense  stands  forth 
conspicuously  each  month  and  can  be  looked  after  the 
same  as  any  other  operating  expense. 

The  time  required  to  write  up  the  cards  is  not  as 
much  as  one  might  suppose.  At  the  Baltic  48  air  drills 
are  in  operation  and  about  750  men  are  employed.  On 
June  I  there  were  in  use  871  cards  of  each  kind,  and 
the  value  of  the  supplies  on  hand  shown  by  the  cards 
was  about  $28,000,  which  does  not  include  fuel.  The 
monthly  consumption  of  supplies  covered  by  the  cards  is 
about  $8,500.  With  this  amount  of  business  our  office 


CARD  SYSTEM  FOR  MINE  ACCOUNTS     83 


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84  THE  ECONOMICS  OF  MINING 

force  consists  of  a  chief  clerk,  one  assistant,  one  time- 
keeper and  one  supply  clerk.  It  takes  the  clerk  and  his 
assistant  about  i-J  days  to  write  up  the  cards  after  the 
supply  clerk's  reports  are  received.  As  previously 
stated,  the  data  taken  from  bills  are  copied  on  the  cards 
at  the  end  of  the  month  when  the  office  work  is  lightest. 

What  are  the  advantages  of  the  card  system?  Under 
our  old  method  the  supply  account  was  charged  with  all 
expense  connected  with  the  supplies,  and  then  10  per 
cent  was  added  to  a  price  list  to  insure  a  balance  on  the 
safe  side  of  the  account.  The  list  of  prices  could  not  be 
kept  correct,  because  prices  change,  and  the  average 
price  of  the  stock  on  hand  was  not  known;  therefore, 
the  prices  were  seldom  right^  and  the  10  per  cent  addi- 
tion to  this  approximate  price  only  served  to  insure 
charging  off  enough. 

When  the  time  came  for  taking  an  inventory  these 
prices  would  be  put  on  the  list  turned  in  to  the  office, 
and  if  the  total  value  was,  sufficient  to  balance  the  ac- 
count, everything  was  considered  satisfactory.  Gener- 
ally there  was  a  surplus,  but  just  where  it  came  in  was 
not  known.  If  there  was  a  deficit,  another  round  of 
warehouses  and  surface  would  be  made  and  each  trip 
would  result  in  finding  something  that  had  been  omitted 
from  the  original  inventory.  These  finds  might  bal- 
ance the  account.  If  they  did  not,  then  the  deficit 
would  be  charged  off  and  another  year  started  with- 
out knowing  just  where  the  deficit  occurred.  Under 
the  card  system  the  balance  that  should  be  on  hand  is 
shown  on 'the  first  of  each  month  and  this  can  readily  be 
checked,  in  most  cases  by  inspection,  if  desired.  In  any 
event,  the  cards  check  the  consumption,  because,  when 
a  requisition  is  put  in  for  more  of  a  given  article,  the 
cards  should  show  the  stock  of  that  particular  article  to 
be  used  up  or  nearly  so. 

By  entering  the  exact  bill-cost  on  the  office  cards  and 


CARD  SYSTEM  FOR  MINE  ACCOUNTS     85 


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86  THE  ECONOMICS  OF  MINING 

computing  the  average  price  each  month  if  necessary, 
the  supplies  are  charged  off  at  exactly  the  proper  price. 

With  certain  supplies  which  are  bought  in  bulk  and 
issued  in  small  quantities  that  are  not  accurately  meas- 
ured, such  as  waste,  oil,  etc.,  the  quantity  reported  as 
consumed  can  be  increased,  and  the  price  kept  the  same 
and  chances  of  a  deficit  avoided.  By  charging  only  the 
bill  cost  to  the  supply  account,  the  balance  as  shown  by 
the  cards  should  check  with  the  balance  shown  by  the 
account.  When  the  inventory  is  taken  it  is  only  neces- 
sary to  determine  whether  the  balances  called  for  by  the 
cards  are  on  hand.  If  there  is  any  deficit  or  surplus  it 
is  known  just  where  it  occurs,  and  the  trouble  can  be 
located  at  once  and  a  remedy  applied.  By  this  method 
the  exact  cost  per  ton  for  supplies  is  known  from  month 
to  month,  and  the  average  for  the  year  should  not  be 
affected  by  any  surplus  or  deficit. 

In  addition  to  these  advantages  there  are  other  im- 
portant ones,  especially  where  the  purchasing  is  done  at 
the  Imines.  It  can  readily  be  seen  that  from  time  to  time 
as  supplies  are  purchased  it  is  easy  to  run  over  the  cards 
and  make  up  an  order  covering  a  sufficient  quantity  of 
supplies  to  offer  an  inducement  to  dealers  to  figure 
close.  Then,  too,  by  studying  the  consumption  of  sup- 
plies as  shown  by  the  cards,  it  is  often  possible  to  sim- 
plify the  stock  carried,  , getting  rid  of  some  sizes  or 
adopting  certain  standards. 

In  conclusion,  I  wish  to  state  that  the  successful  intro- 
duction of  this  system  at  the  Baltic  mine  has  been  due 
largely  to  the  capacity  and  energy  of  the  chief  clerk, 
Mr.  William  C.  Cole. 


INVESTMENT  IN  MINES 

(Editorial,  October  3,  1903.) 

In  our  last  issue  we  discussed  the  general  advice  on 
mining  investments  which  has  appeared  in  the  London 
Economist  from  the  pen  of  Mr.  J.  H.  Curie,  the  Special 
Mining  Commissioner  of  that  most  excellent  financial 
chronicle.  Mr.  Curie  himself  has  done  excellent  service 
in  clearing  away  cobwebs  from  the  business  of  mining, 
so  that  his  ideas  come  as  from  one  having  authority  and 
not  as  the  scribes  of  the  daily  press.  Nevertheless,  we 
think  some  of  his  sweeping  conclusions  go  beyond  the 
mark;  for  instance,  .the  dictum  that  "there  is  only  one 
correct  way  to  value  a  mine — that  is  by  its  ore  reserves. 
Any  other  basis  of  valuation  is  wrong."  As  an  antidote 
to  the  twaddle  of  descriptive  matter  which  used  to  form 
the  larger  portion  of  mine  reports  not  many  years  ago 
such  a  statement  as  the  foregoing  is  distinctly  bracing, 
but  Mr.  Curie  is  giving  his  patient,  that  is,  his  client,  a 
corrective  which  will  produce  spasms  if  taken  without 
dilution. 

We  are  all  agreed,  all  of  us  who  want  to  see  mining 
conducted  upon  the  principles  of  sound  business,  that 
the  determination  of  ore  reserves  is  fundamental,  and 
that  the  amount,  value  and  profit  to  be  derived  from 
such  reserves  must  be  the  basis  of  any  appraisal  of  a 
mining  property — but  that  is  not  the  whole  story,  by  a 
great  deal.  One  mine  may  have  $500,000  of  ore  in  re- 
serve with  a  net  profit  of  $300,000,  while  another  may 
have  only  $200,000  gross,  with  $100,000  net  profit  as- 
sured, and  yet  the  latter  may  be  worth  more  than  the 
former.  One  mine  may  be  like  a  man  of  advanced  years 
with  a  fine  record  of  achievement  and  great  capacities 
apparently  unimpaired,  but  still  with  the  certainty  of 


88  THE  ECONOMICS  OF  MINING 

a  proximate  cessation  to  his  activities,  while  another 
mine  may  be  comparable  to  a  young  man  with  not 
much  to  speak  of  in  the  way  of  work  done,  but  with 
great  powers  and  the  promise  of  a  fine  career.  We  re- 
member a  mine  which  was  carefully  surveyed  and 
sampled,  with  the  result  that  it  showed  ore  which  would 
yield  $456,000  net  profit,  but  most  of  the  headings  were 
poor  and  the  ore  bodies  were  evidently  erratic;  such  a 
property  was  worth  no  more  than  the  net  value  of  the 
ore,  if  it  were  worth  as  much,  the  interest  on  the  money 
invested  during  the  period  required  to  take  out  the  ore 
reserves  being  balanced  against  the  slight  chances  of  fur- 
ther successful  development.  Another  mine  with  $80,- 
ooo  of  profit  assured  was  sold  for  $250,000  cash,  and 
subsequently  made  three  men  millionaires.  Of  course, 
Mr.  Curie  is  addressing  English  investors  in  mining 
stocks  and  not  expectant  purchasers  of  mining  property; 
nevertheless,  the  same  considerations  hold  good.  We 
might  instance  the  Tomboy  mine,  situated  in  Colorado, 
but  owned  largely  by  British  investors.  That  mine  was 
bought  mainly  on  the  fine  showing  made  by  ore  re- 
serves which  were  over-rated  and,  as  a  consequence,  it 
proved  a  disappointing  investment;  beyond  the  original 
ore  blocked  out  at  the  time  of  purchase  very  little  more 
was  ever  opened  up.  Subsequently,  thanks  to  an  ener- 
getic manager  and  a  capable  directorate,  the  company 
purchased  an  adjoining  young  mine,  practically  a  pros- 
pect, which,  though  secured  for  a  fraction  of  the  sum 
paid  for  the  original  Tomboy  mine,  has  since  turned  out 
a  much  more  valuable  property.  It  is  a  fact  that  the 
Tomboy  shares  were  worth  more  on  the  purchase  of  a 
prospect  than  on  the  acquisition  of  a  well-developed 
large  mine. 

Ore  reserves  are  not  everything;  expansion  and  de- 
velopment are  of  the  essence  of  successful  mining.  It 
has  been  pointed  out  in  these  columns  that  a  mining 


INVESTMENT  IN  MINES  89 

property  may  be  ruined  by  having  too  much  ore-bear- 
ing ground  opened  up,  for  the  cost  of  keeping  the 
levels  open,  draining  extensive  openings  and  renewing 
the  timbering  may  represent  a  high  rate  of  interest  on 
the  capital  lying  dormant  in  the  ore  reserves.  This  re- 
fers particularly  to  iron  and  coal  properties,  but  it  may 
very  well  apply  to  large  low-grade  gold  deposits  such  as 
those  of  the  Rand  or  mines  belonging  to  the  class  of 
the  Homestake  and  Alaska  Treadwell.  In  other  words, 
it  is  not  profitable  to  open  up  ore  reserves  much  in  ex- 
cess of  the  tonnage  equivalent  to  the  output  for  a  cer- 
tain time.  That  period  may  be  determined  by  the  expense 
of  maintenance,  as  already  described,  and  the  character 
of  the  ore  deposits;  if  these  are  erratic  or  sporadic,  it  is 
obviously  necessary  to  'give  hostages  to  fortune'  and 
ensure  regularity  of  production  by  averaging  a  large 
number  of  discoveries  and  stopes  of  varying  tenor. 

Mining  would  not  engage  the  energies  and  interest  of 
so  many  if  it  were  but  a  question  of  running  a  tape  over 
blocks  of  ore  and  testing  their  value  by  sampling;  all 
this  is,  we  repeat,  fundamental,  and  Mr.  Curie  has  done 
well  in  emphasizing  this  basic  fact ;  but,  beyond  such 
necessary  procedure,  it  remains  a  fact  that  the  attract- 
iveness of  mining,  that  feature  of  it  which  requires  the 
most  judgment,  is  the  weighing  of  probabilities  in  future 
development.  It  is  on  the  chances  of  this  that  men  buy 
and  sell  mines,  taking  bigger  risks  than  Mr.  Curie  is 
willing  to  face,  but  expecting  larger  returns  also.  We 
venture  to  doubt  whether  TO  per  cent  investments  on  a 
basis  of  ore  reserves  will  ever  be  a  leading  feature  of 
gold  mining  activity;  rather,  it  is  the  20  to  25  per  cent  re- 
turn with  the  chances  of  a  speculative  enhancement 
which  engages  the  mine  operators  who  are  most  suc- 
cessful. After  all,  the  best  kind  of  mining  is  that  actu- 
ated by  the  combined  skill  and  spirit  exhibited  by  the 
Cornish  'tributer'  or  more  modern  lessee,  or  'leaser/ 


90  THE  ECONOMICS  OF  MINING 

who  sizes  up  a  certain  portion  of  territory  in  a  mine  and 
takes  the  risk  of  developing  it,  not  on  ore  to  be  seen 
in  plain  view,  but  on  the  reasonable  expectation  of  find- 
ing something  good.  It  is  the  experienced  tributer's 
sense  and  not  the  money-lender's  caution  which  has 
built  up  mining  in  the  past  and  will  make  it  the  great  in- 
dustry in  the  future. 


GOLD  MINE  ACCOUNTS 

(October    10,    1903.) 

The  Editor: 

SIR — It  is,  perhaps,  not  astonishing  that  so  little  has 
been  written  on  this  discussion  which  Mr.  Hoover  so 
comprehensively  opened  on  July  u,  but,  none  the  less, 
I  own  to  a  disappointment  which  must  be  shared  by 
an  important  contingent  of  the  profession. 

The  subject  is  so  large  that  engineers  may  well  hesi- 
tate to  attack  it  in  the  limited  area  of  'Discussion/  and 
yet  I,  for  one,  believe  that  much  can  be  gained  by  an 
unlimbering  of  ideas  upon  the  subject. 

Bookkeeping  pure  and  simple  is  a  matter  of  arith- 
metical accuracy  and  has  been  developed  into  a  science. 
Accounting  is  a  broader  term  and  depends  for  its  value 
upon  the  proper  segregation  of  items.  The  subdivision 
of  Mine  Accounting  (I  take  the  liberty  of  dropping  Mr. 
Hoover's  word  'Gold,'  which  seems  to  draw  a  distinc- 
tion scarcely  necessary  in  this  country  at  least)  is  one 
of  the  tools  of  the  mining  engineer  and  one  that  nowa- 
days is  of  increased  importance;  and  it  certainly  seems 
that  the  developments  in  other  lines,  in  Mine  Surveying, 
for  instance,  or  Economic  Geology  or  Metallurgy,  have 
outrun  those  in  this  no  less  important  one.  It  would 
seem,  then,  that  a  discussion  of  the  subject  could  not 
but  result  in  a  clearer  appreciation  of  the  needs  of  the 
case  and  at  least  a  nearer  approach  to  uniformity  in 
practice,  though  it  is  scarcely  probable  that  anything 
approaching  the  uniformity  of  surveying  methods  could 
be  hoped  for. 

Mr.  Jenkins  has  indicated  how  easily  segregation  can 
be  accomplished,  and  I  for  one  can  bear  witness  to  that 
from  personal  practice.  Probably  the  majority  of  engi- 
neers would  cordially  adhere  to  a  practicable  uniform 


92  THE  ECONOMICS  OF  MINING 

system  for  this.  Still,  it  is  doubtful  if  any  two  managers 
desire,  or  many  mines  demand,  the  same  degree  or  kinds 
of  segregations  of  costs,  so  that  any  'universal'  system 
must  be  one  of  great  elasticity.  We  can  scarcely  expect 
that  mine  managers  will  favor  any  system  that  demands 
the  carrying  of  accounts  for  which  they  see  no  use,  so 
that  our  proposed  system  must  be  capable  of  simplifica- 
tion to  a  few  basal  accounts  as  well  as  of  infinite  elabo- 
ration. There  are  cases  where,  to  properly  manage  and 
check  up  a  business  and  to  carry  on  the  "interminable 
campaign  for  economy  and  improvement,"  the  manager 
may  have  to  subdivide  extensively,  and  it  is  almost  con- 
ceivable that  there  are  other  cases  where  the  "morbid" 
misapplication  of  General  Ledger  Accounts,  spoken  of 
by  Mr.  Comstock,  quite  fills  the  need;  and  this  diversity 
of  need  must  be  duly  considered  in  devising  any  general 
system. 

But  there  is  a  particular  class  of  accounts  that  have 
always  been  a  stumbling  block,  in  the  handling  of  which 
there  are  serious  and  fundamental  divergences.  Mr. 
Hoover  has  referred  to  these  in  the  second  column  of 
his  discussion,  and  on  another  page  of  the  same  number 
of  the  JOURNAL  are  two  and  one-half  columns  on  a  simi- 
lar subject.1  The  gamut  of  common  variations  is  clearly 
and  concisely  run  up  by  Mr.  Hoover,  while  Mr.  G.  A. 
Denny,  in  the  'Deep  Level  Mines  of  the  Rand,'  expands 
the  matter  most  luminously.  I  am  referring,  of  course, 
to  that  list  of  accounts  that  includes  Capital,  Deprecia- 
tion, Maintenance,  Reserve  Fund,  Amortization  of  Capi- 
tal and  Mine  Development  Redemption,  to  use  Mn 
Denny's  own  headings  in  the  latter  half  of  Chapter  X 
of  his  book. 

I  am  not  so  foolhardy  as  to  open  a  discussion  on  these 
vexed  questions  here,  but  the  arguments  stated  by  Mr. 

1  'Payment  of  Extension  of  Mining  Plant  Out  of  Revenue/    By 
J.  H.  Curie.    This  JOURNAL,  p.  48,  July  n,  1903. 


GOLD  MINE  ACCOUNTS  93 

Denny  pro  and  con  show  most  clearly  the  disparate  views 
that  may  logically  be  held.  In  view  of  this,  then,  it 
would  seem  that  the  most  that  could  be  done  in  regard 
to  this  system  of  accounts  by  any  such  joint  commis- 
sion, as  was  proposed  by  Mr.  Hoover  and  seconded  with 
elaborations  by  Mr.  Comstock,  would  be  to  urge  the 
general  adoption  of  certain  broad  principles  involving 
the  demand  for  an  explicit  statement  in  each  instance 
as  to  just  what  each  account  included.  In  regard  to  the 
Operating  Accounts,  segregations  should  be  so  made  in 
the  books  of  first  entry,  even  though  not  carried  into 
the  ledgers,  that  expert  examination  could  re-apportion 
costs  at  any  time. 

On  lines  such  as  these  it  seems  to  me  that  a  reason- 
able uniformity  could  be  expected.  Beyond  that  it  would 
scarcely  be  possible  to  go. 

R.  OILMAN  BROWN. 

San  Francisco,  Sept.   16,  1903. 


CARD    SYSTEMS    FOR    MINE    ACCOUNTS 

(October    17,    1903.) 

The  Editor: 

SIR — The  use  of  card  systems  in  multitudinous  varia- 
tion in  almost  every  line  of  business  except  mining  has 
now  become  a  recognized  essential  to  proper  accounting. 
We  have  books  of  great  value  explaining  in  detail  the  ap- 
plication of  such  systems  to  factory  costs  and  to  classi- 
fication and  summarizing  of  expenditures  in  mercantile 
houses;  the  keeping  of  records  in  accessible  form  for 
practical  business  purposes  is  used  by  banks,  trust  com- 
panies, insurance  companies,  libraries,  physicians,  den- 
tists, mercantile  agencies,  real  estate  agents,  telephone  and 
telegraph  companies,  gas  companies,  attorneys,  collection 
agencies,  manufacturers,  railroads,  churches,  architects, 
hotels,  publishers,  societies  and  by  almost  every  conceiv- 
able class  of  industries,  except  those  connected  with  min- 
ing and  metallurgic  practice. 

There  are  some  important  mining  companies,  smelting 
works  and  mining  engineers  that  have  taken  advantage 
of  the  ready  supply  of  filing  cases  and  card  stock  in  the 
market  to  make  more  or  less  desultory  attempts  to  im- 
prove upon  the  common  slipshod  and  ineffectual  modes 
of  accounting  which  prevail  in  these  departments.  That 
this  practice  has  not  become  general  is  attested  by  the 
experience  of  the  writer  in  consultation  on  the  subject  of 
mine  accounts,  and  very  recently  by  the  reading  of  a 
paper  by  Mr.  F.  W.  Denton,  which  was  published  in  this 
JOURNAL,  September  26,  1903,  p.  471.' 

Without  desiring  in  any  manner  to  detract  from  Mr. 
Denton's  paper,  I  merely  wish  to  refer  to  it  as  proof  that 
the  mining  fraternity  is  far  and  away  behind  the  times 

*  'A  Card  System  for  Mine  Supply  Accounts.'  By  F.  W.  Den- 
ton.  Paper  read  before  the  Lake  Superior  Mining  Institute, 
August,  1903. 


CARD  SYSTEMS  FOR  MINE  ACCOUNTS     95 

in  failing  to  adopt  modern  approved  methods  in  the 
counting  house  and  about  the  works  generally.  For  there 
is  nothing  different  in  the  forms  and  uses  outlined  in 
that  paper  from  what  are  ordinarily  in  operation  at  thou- 
sands of  well-regulated  commercial  establishments  not 
engaged  in  mining.  That  the  method  is  new  to  mining 
men  may  be  inferred  from  the  fact  that  the  present  writer 
has  never  run  across  it  in  such  cases,  except  where  he  has 
himself  instituted  it,  always  with  gratifying  results. 

There  are  features  of  Mr.  Denton's  paper  which  fur- 
ther illustrate  what  I  have  found  to  be  the  most  stubborn 
prejudice  to  overcome  in  installing  such  systems  at  the 
mines.  This  is  the  inability  to  understand  how  a  method 
which  records  the  minutest  details  can  be  made  really  to 
save  labor  and  time  in  actual  use.  Our  author  is  evidently 
not  aware  that  the  plan  adopted  at  the  Baltic  mine  for 
supply  accounts  is  but  the  simple  beginning  of  reform, 
nor  does  he  appear  to  realize  that  his  method  of  writing 
up  the  records  is  but  a  slight  improvement  upon  the 
wasteful  methods  of  the  majority  under  the  ordinary 
system. 

After  a  number  of  years  of  successful  employment  of 
the  classified  card  principle,  not  only  with  supply  ac- 
counts, but  with  pay-rolls,  assays,  surveys,  the  details  of 
mine  work,  mill  work  and  all  other  branches  of  the  busi- 
ness, I  do  not  hesitate  to  say  that  it  provides  fully  for 
every  detail  in  such  manner  as  to  effect  remarkable  econ- 
omy in  time,  cost  and  labor,  at  the  same  time  insuring 
accuracy,  proper  checks  upon  individuals,  and,  above  all, 
the  placing  of  the  accounts  in  a  form  to  be  serviceable  as 
truthful  exponents  of  profit  and  loss,  readily  understand- 
able by  manager  and  directors  without  the  aid  of  expert 
accountants  as  interpreters. 

The  plan  given  by  Mr.  Denton  does  not  appear  to  econ- 
omize time  materially  over  the  ordinary  method,  although 
he  deems  it  necessary  to  emphasize  the  point  that  it  is  no 


96  THE  ECONOMICS  OF  MINING 

less  prompt  in  operation.  Here  again  I  have  found  great 
difficulty  at  the  start  in  convincing  old  accountants  of  a 
thoroughly  proved  fact,  that  the  records  can  be  so  en- 
tered as  to  save  time  abundantly,  and  so  as  to  do  away 
entirely  with  the  later  work  of  'writing  up.'  My  strict 
injunction  with  all  card  systems,  in  practice,  is  do  it 
now.  This  gives  the  day's  own  record  a  completed 
character,  which  has  untold  value  in  ways  only  to  be  ap- 
preciated from  actual  experience.  Every  night  the  super- 
vising officer  on  the  ground  thus  possesses  means  of 
checking  expenditure  at  any  point  or  at  all  points.  It  is 
a  wonderful  incentive  to  high  ideals,  a  certain  assurance 
of  prompt  detection  of  error  and  inefficient  service,  and  it 
breeds  habits  of  economy  and  devotion  to  company  in- 
terests. 

In  the  Baltic  case,  Mr.  Denton  uses  the  card  in  connec- 
tion with  memorandum  books.  They  thus  become  a  mere 
adjunct  to  the  old  method  instead  of  a  short-cut  method 
in  themselves.  My  plan  is  very  different.  In  general  out- 
line, this  is  the  motif.  Each  and  every  officer  of  record, 
be  he  foreman,  timekeeper,  supply  clerk  or  other  agent, 
whether  receiver,  distributor,  consumer  or  producer,  is 
supplied  with  cards  adapted  to  his  work,  and  each  records 
his  own  data  without  knowledge  in  common.  Some  pro- 
vision is  made  to  check  the  report  of  one  by  that  of 
another.  Daily  reports  are  filed  at  the  office,  from  every 
department,  on  forms  especially  prepared  to  epitomise  or 
classify  the  day's  business.  In  the  office  a  set  of  forms  is 
provided  to  take  up  summaries  of  each  day's  report,  on 
sheets  with  columns  for  each  summary  account,  and  hori- 
zontal numbered  lines  from  I  to  31.  The  simple  adding 
of  the  columns  gives  totals  for  each  account  for  the 
month,  or  for  any  minor  period,  if  desired  at  any  time. 
Columns  are  provided  for  values  by  day  and  by  month, 
and  everything  relating  to  the  business  for  the  month 
is  in  the  hands  of  the  accountant  on  the  last  day  of  the 


CARD  SYSTEMS  FOR  MINE  ACCOUNTS     97 

month.  The  manager  has  available  each  night  a  correct 
replica  of  the  day's  business,  and  can  readily  strike  leaks 
and  lapses  at  once.  Moreover,  the  whole  of  the  month's 
business  is  registered  in  convenient  form  for  immediate 
transmission  to  the  home  office.  This  is  not  a  theoretical 
statement,  but  one  verified  thoroughly  in  my  own  prac- 
tice to  the  full  satisfaction  of  all,  from  directors  and  share- 
holders down  to  the  humblest  employee  at  the  mines. 

One  point  must  be  made  perfectly  clear,  and  that  is  all 
that  space  will  now  allow.  The  one  secret  of  success  in 
this  line  is  to  substitute  forms  for  clerks.  The  old  system 
of  accounting  employs  cumbersome  books  of  record  ar- 
ranged only  by  the  dates  or  page  numbers,  requiring  an 
index  or  a  system  of  back  references.  The  modern  plan 
here  advocated  classifies  all  items  immediately,  making 
well-devised  forms  and  self-indexing  appliances  replace 
clerk  hire,  in  large  measure.  By  this  method,  properly 
handled,  I  have  been  able  to  get  large  pay-rolls  ready  with 
all  details  of  work  done,  deductions  for  rent,  hospital, 
store  account,  etc.,  within  one  day  of  the  close  of  the 
month,  besides  having  at  the  accountant's  elbow  a  suffi- 
cient daily  record  of  every  detail  of  each  man's  employ- 
ment, indebtedness  and  balance  due  him  beyond  chance  of 
dispute.  It  is  surprising  how  simple  and  accurate  the 
method  is,  once  the  proper  forms  have  been  worked  out. 
Here  is  where  the  greater  part  of  the  brain  work  must 
be  applied.  Common  sense  and  the  faithful  recording  of 
details  on  the  spot,  with  a  filing  of  forms  each  evening, 
will  accomplish  all  the  rest,  provided  that  the  forms  them- 
selves be  prepared  by  a  master  hand.  Perhaps  some  fur- 
ther illustration  may  be  forthcoming  later,  if  your  readers 
evince  sufficient  interest  to  make  it  profitable. 

THEO.  B.  COMSTOCK. 

Los  Angeles,  Cal.,  Oct.  3,  1903. 


APPRAISING  FUTURES 

(Editorial,  November   7,   1903.) 

On  another  page  we  publish  a  letter  from  an  exper- 
ienced shareholder  concerning  the  appraisal  of  the  poten- 
tialities of  a  mining  property.  Except  in  the  rare  case  of 
a  mine  which  has  been  bottomed,  or  one  the  ore  reserves 
of  which  are  restricted  within  an  area  already  fully 
tested,  there  is  a  "something  more"  than  the  ore  reserves 
which  has  to  be  included  in  any  valuation.  How  much 
value  to  attach  to  the  varying  chances  of  further  success- 
ful development  is  a  problem  which  always  comes  up  as 
soon  as  the  measurable  ore  reserves  have  been  determined. 
From  the  very  nature  of  the  case,  no  rule  can  be  laid 
down.  How  much  usefulness  and  beneficent  work  would 
you  estimate  to  be  included  in  the  future  of  a  capable 
man  of  40,  50,  60  or  70  years  of  age  ?  While  the  amount 
may  be  inferred  from  his  performance  in  the  past,  never- 
theless the  accomplishment  already  to  his  credit  may  have 
been  won  at  the  expense  of  his  vital  powers,  and  the 
measure  of  it  might  be  merely  a  subtraction  from  the  total 
to  be  credited  to  his  whole  career.  Obviously  this  reason- 
ing will  depend  upon  whether  the  man  is  40  or  70  years 
old.  At  any  rate,  the  simile  is  not  without  its  counterpart 
in  the  case  of  appraising  the  future  of  a  developed  mine. 

A  well-known  Tasmanian  mine  has  just  been  made  the 
basis  of  a  company  formed  in  London.  The  property  is 
capitalized  at  £500,000;  the  report  of  reputable  engineers 
states  that  it  "should  be  capable  of  producing  a  profit  of 
from  £95,000  to  £100,000  per  annum,  assuming  that  the 
reef  maintains  its  size  and  value."  Should  certain  exten- 
sions of  levels  and  cross-cuts  meet  with  the  success  an- 
ticipated, the  ore  reserves  will  amount  to  a  tonnage  equal 
to  three  years'  production  on  the  scale  outlined.  The 


APPRAISING  FUTURES  99 

mine  is  worked  out  down  to  718  ft.,  it  has  an  ore-body 
about  1,500  ft.  long,  which  has  been  cut,  but  not  proved, 
at  1,000  ft.  Of  ore  blocked  out,  there  is  only  8,500  tons, 
equivalent  to  a  net  profit  of  about  £9,000,  and  the  esti- 
mates of  future  production  are  based  on  the  expectation 
of  uninterrupted  persistence  and  continuity.  Even  these 
estimates  show  a  return  of  only  60  per  cent  on  the  capital, 
so  that  a  shareholder  is  taking  a  fair  risk  for  60  per  cent 
of  his  money,  and  a  long  shot  for  the  balance.  And  this 
is  without  regard  to  interest  on  the  .investment.  In  this 
particular  instance,  the  probabilities  of  future  successful 
development  must  be  weighed  against  extremely  heavy 
pumping  costs,  the  full  extent  of  which  is  a  matter  of 
uncertainty,  though  the  government  geologist,  Mr.  W.  H. 
Twelvetrees,  who  doubtless  expresses  local  opinion,  has 
arrived  at  the  conclusion  that  the  pumping  plant,  to  be 
installed  according  to  the  plans  of  the  company,  will 
prove  inadequate.  At  all  events,  here  is  a  factor  of  im- 
portance which  must  offset  even  the  apparent  persistence 
of  the  ore-shoot  upon  which  the  estimates  of  profits  are 
based. 

As  the  flotation  is  an  honest  one  throughout,  and  the 
undertaking  is  in  the  hands  of  thoroughly  capable  men, 
it  affords  a  good  example  of  the  ideas  of  different  people 
upon  this  difficult  question  of  mine  valuation.  We  would 
hazard  the  opinion  that,  as  a  rule,  with  everything  look- 
ing favorable,  a  mine  in  the  vigor  of  its  life  is  worth  about 
half  as  much  again  as  the  net  profit  in  sight,  but  this  re- 
fers only  to  mines  which  have  apex  rights  and  can  go 
down  indefinitely  on  the  dip  of  the  lode  or  have  ample 
territory  for  further  explorations ;  moreover,  it  is  but  a 
rough  approximation  of  the  chances,  just  as  one  might 
say  that  a  healthy  man  of  40  can  reasonably  be  expected 
to  engage  actively  in  his  profession  or  business  for  twenty 
years  longer.  In  practice,  the  engineer  will  weigh  the 
evidence  in  each  case — and  it  will  never  be  the  same 


100  THE  ECONOMICS  OF  MINING 

in  any  two  mines — and  he  will  realize  that  a  property  is 
expected  to  return  not  the  capital  alone,  but  a  high  rate 
of  interest  during  the  time  required  to  get  the  return  of 
that  capital.  This  refers  to  large  developed  mines  necessi- 
tating heavy  capitalization;  the  question  of  the  price  of 
unproved  prospects,  or  likely  looking  young  mines,  allows 
a  scope  for  appraisement  beyond  the  restriction  of  any 
general  rule.  Then  comes  that  insistent  and  final  factor 
in  all  these  ratiocinations,  namely,  the  personal  equation. 
But  that  is  another  story. 


APPRAISING  THE  VALUE  OF  A  MINE 

(November    7,    1903.) 

The  Editor: 

Sir. — Your  editorial  in  the  issue  of  October  3,  deal- 
ing with  Mr.  Curie's  system  of  valuing  a  mine,  opens 
the  way  for  a  discussion  on  a  point  which  is  often  raised 
in  London.  Among  mining  engineers  and  others  fa- 
miliar with  mining  operations  there  is  a  desire  that  some 
system  should  be  adopted  for  appraising  the  speculative 
value  of  a  mine,  in  addition  to  the  value  of  the  ore 
blocked  out  or  exposed.  When  a  property  is  offered  for 
sale,  the  vendors  naturally  stipulate  that  something 
more  than  the  ore  reserves  shall  be  considered  when  the 
price  is  being  arranged.  This  extra  value  of  the  mine 
is  at  present  appraised  in  a  haphazard  way,  and  it  usu- 
ally amounts  to  just  as  much  as  the  vendors  think  they 
can  squeeze  out  of  the  purchasers  or  the  public. 

It  is  quite  impossible  to  lay  down  any  hard  and  fast 
mathematical  formula  to  meet  the  requirements  of  the 
case,  because  the  chances  of  the  continuity  of  veins  vary 
with  practically  every  individual  mine,  or  at  any  rate 
with  each  particular  geological  district.  Also,  the  spec- 
ulative value  varies  relatively  to  the  value  of  the  ore  re- 
serves, according  to  the  amount  of  development  done. 
In  the  two  extreme  cases  of  a  prospect  and  a  limited 
proved  deposit,  the  relative  values  differ  widely,  for  in 
a  prospect  the  speculative  value  is  everything,  while  in 
a  property,  like  some  of  the  Johannesburg  mines,  the 
speculative  value  is  at  a  minimum.  In  spite  of  these  two 
very  obvious  obstacles,  I  think  some  general  agreement 
might  be  found  among  mining  men  for  dealing  with 
this  factor  in  the  value  of  a  mine.  Some  standard  sys- 
tem for  reporting  might  be  adopted,  so  that  the  opinion 
of  the  engineer  as  to  the  money  value  of  the  chances 


102  THE  ECONOMICS  OF  MINING 

of  further  ore  being  discovered  with  development  might 
be  given  without  being  misunderstood.  I  am  aware 
that  many  engineers  will  object  to  a  proposition  which 
would  saddle  them  with  such  a  grave  responsibility,  and 
I  admit  that,  in  the  hands  of  men  of  no  professional  pride, 
this  function  or  duty  would  be  wasted  and  perhaps  mis- 
used. The  mining  profession  is  so  strong  in  influence 
for  good  nowadays,  however,  that  the  responsibility 
might  be  safely  undertaken.  Both  THE  ENGINEERING 
AND  MINING  JOURNAL  and  the  Institution  of  Mining  and 
Metallurgy  have  done  excellent  work  in  checking  the 
abuse  of  'ore  in  sight'  by  inducing  engineers  to  adopt  a 
more  definite  plan  of  reporting  on  ore  already  blocked 
out  and  developed,  and  the  further  step  of  giving  an 
opinion  as  to  the  possibilities  of  the  future,  over  and 
above  the  ore  actually  discovered,  would  still  further 
assist  in  suppressing  rotten  finance  and  over-capitaliza- 
tion of  companies. 

I  give  this  suggestion  for  what  it  is  worth,  and  hope 
it  will  receive  the  attention  of  mining  men. 

SHAREHOLDER. 

London,  Oct.  14,  1903. 


MINING  COSTS  AT  CRIPPLE  CREEK 

(November  21,   1903.) 

The  Editor: 

SIR — The  geology  and  vein  structure  of  Cripple  Creek 
have  been  described  almost  ad  nauseam  by  many  writers, 
but,  so  far  as  I  have  observed,  little  has  been  said  to  the 
engineering  public  about  the  very  vital  problem  of  how 
to  make  money  out  of  these  much-discussed  deposits. 
The  impression  seems  to  prevail  among  mining  men  out- 
side of  the  district  that  Cripple  Creek  methods  are  crude 
and  operating  costs  high.  Now,  while  glaring  examples 
may  be  produced,  in  the  district,  of  almost  every  fault 
that  could  be  mentioned  in  the  management  of  mines,  I 
think  that  the  conditions  under  which  the  Cripple  Creek 
mine  superintendent  labors  are  not  thoroughly  under- 
stood, and  that  the  methods  employed,  while  they  may 
be  behind  the  times  in  some  respects,  are  yet  fully  up 
to  the  average  in  others,  and  even  ahead  of  the  average 
in  regard  to  certain  features  of  mining  practice. 

A  man  brought  up  in  the  Lake  Superior  region,  where 
iron  and  copper  ores  are  mined  from  underground  at  a 
cost  of  75c.  to  $i  per  ton,  is  apt  to  smile  at  mining  costs 
of  $10  to  $15  per  ton,  even  after  making  every  allowance 
for  differences  in  the  prices  of  labor  and  supplies.  The 
conditions,  however,  are  so  radically  different  that  any 
comparison  on  the  basis  of  tonnage  is  quite  worthless. 
Before  the  Lake  Superior  man  can  arrive  at  any  under- 
standing of  mining  costs  in  Cripple  Creek,  he  must 
realize  the  two  following  facts : 

1.  All  ores  shipped  from  Cripple  Creek  are  concen- 
trates produced  by  hand  sorting. 

2.  The  amount  of  development  work  necessary  to  find 
the  ores  is  probably  50  or  100  times  greater  than  in  the 
Lake  Superior  mines. 


104  THE  ECONOMICS  OF  MINING 

At  the  larger  properties  of  Cripple'  Creek  the  cost  of 
mining  the  total  product  of  ore  and  waste  is  only  from 
$2.50  to  $3.50  per  ton,  this  cost  covering  all  the  outlay 
of  the  companies  for  all  purposes,  including  taxes,  in- 
surance and  general  expenses.  This  cost  does  not  com- 
pare unfavorably  with  that  of  mining  in  such  places  as 
Butte,  the  Coeur  d'Alene,  or  even  Lake  Superior,  when 
it  is  considered  that  labor  at  Cripple  Creek  costs  42. 5c. 
an  hour,  as  against  probably  22. 5c.  in  Michigan.  It 
must  be  remembered  that  the  above  cost,  of  $2.50  to 
$3.50  for  crude  rock,  includes  the  cost  of  sorting  the  ore, 
which  is  equivalent  to  that  of  milling  in  other  camps, 
and  is  fully  as  expensive. 

It  may  be  said,  therefore,  that  on  the  basis  of  crude 
rock  hoisted  the  Cripple  Creek  mines  have  no  reason  to 
be  ashamed  of  their  costs,  as  compared  with  those  of 
other  places.  This  is  emphatically  the  case,  in  view  of 
the  fact  that  the  specific  gravity  of  the  Cripple  Creek 
rock  is  much  less  than  that  of  lead,  copper  or  iron  ore; 
that  most  of  the  rock  is  broken  from  shafts,  drifts,  raises, 
or  from  stopes  cut  out  as  narrow  as  possible;  that  these 
working  places,  from  their  very  nature,  preclude  the  use 
of  appliances  designed  to  handle  material  on 'a  large 
scale,  and  that  the  surface  plants  are  hampered  by  the 
fact  that,  when  the  mines  were  started,  no  attention  was 
paid  to  any  future  necessities,  and  consequently  the  equip- 
ment has  been  built  up  piecemeal,  and  is  very  far  from 
being  economical. 

I  hasten  to  state,  however,  that  a  low  cost  per  ton, 
either  of  crude  rock  hoisted  or  of  sorted  ore  shipped, 
does  not  necessarily  indicate  either  good  mining  or  good 
management,  and  is  nearly  as  apt  to  indicate  the  con- 
trary. Two  mines  may  be  working  in  exactly  the  same 
kind  of  ore;  and  one  may  ship  ore  at  more  than  twice 
the  cost  for  mining  that  the  other  does,  and  yet  be  doing 
better  work  and  making  larger  profits. 


MINING  COSTS  AT  CRIPPLE  CREEK     105 


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106  THE  ECONOMICS  OF  MINING 

To  clear  up  this  paradox,  it  is  necessary  to  call  atten- 
tion hastily  both  to  the  character  of  the  ore-bodies,  and 
to  the  conditions  of  sale  and  treatment. 

Cripple  Creek  has  always  been  described  as  a  high- 
grade  camp.  This  is  partly  true.  The  ore  occurs  in  a 
multitude  of  small  veins,  either  single  or  in  aggregates. 
Tn  the  small  seams  which  constitute  either  the  vein  it- 
self, or  a  component  part  of  it,  the  ore  is  rich,  but  the 
rock  on  the  walls,  or  between  the  seams,  is  either  wholly 
or  partly  waste.  The  rich  seams  may  vary  in  thickness 
from  a  mere  crack  to  a  foot  or  two,  and  for  these  widths 
may  carry  from  one  to  several  hundred  ounces  per  ton. 

There  are  no  large  ore-bodies  in  Cripple  Creek.  It  is 
doubtful  if  any  single  ore-body,  or  even  any  single  vein, 
has  produced  100,000  tons  of  shipping  ore.  The  largest 
and  best  veins  have  been  found  in  the  granite,  where  the 
rock-walls  themselves  are  sometimes  uniformly  impreg- 
nated with  rock  value  for  a  width  of  30  or  40  ft.  In  such 
places  large  amounts  of  clean  ore  have  been  mined  and 
shipped  without  sorting,  but  only  in  the  swells;  when 
the  vein  narrows  down,  it  is  always  necessary  to  break 
some  waste,  in  order  to  make  room  to  work. 

The  ore,  therefore,  is  mined  from  veins  of  such  a  char- 
acter that  it  is  impossible  to  get  it  out  without  mixing 
some  worthless  rock  with  it.  The  problem  of  handling 
this  ore  economically  depends  on  the  cost  of  treatment. 
This  cost  is  at  present — and  is  likely  to  be  always — so 
high  that  it  becomes  very  essential  to  throw  out  as  much 
waste,  or  low-grade  ore,  as  possible  before  shipping. 
Could  the  ore  be  treated  for  a  dollar  or  two  a  ton,  the 
proposition  would  be  entirely  different.  The  rich  seams 
in  the  veins  are  always  so  friable  that  a  large  part  of  the 
value  goes  into  fine,  and  can  be  saved  by  catching  the 
latter  on  a  grizzly,  generally  with  about  f-in.  space  be- 
tweeen  the  bars.  Sometimes  the  proportion  of  value 
that  can  be  saved  by  this  method  will  be  as  high  as  90 


MINING  COSTS  AT  CRIPPLE  CREEK     107 

per  cent,  or  even  more,  of  the  total  gold  in  the  vein. 
Sometimes  it  may  be  only  25  per  cent.  It  has  also  been 
proved  possible  to  save  considerable  ore,  simply  by  wash- 
ing the  dust  off  the  waste  rejected  from  the  ore-house, 
and  collecting  this  dust  in  the  form  of  slime. 

It  will  be  evident  to  anyone  who  considers  these  facts 
that  the  problem  of  mining  Cripple  Creek  ore  is  not  so 
much  one  of  breaking  tons,  but  of  saving  value.  It 
must  be  obvious,  for  instance,  that  in  a  vein  where  the 
value  go  into  the  fine,  it  may  be  very  easy  to  break  too 
much  into  fines.  It  may  be  far  preferable  to  take  less  out 
of  a  stope  at  a  greater  cost.  It  is  equally  obvious  that, 
after  the  ore  is  brought  to  the  surface,  it  will  pay  to  reject 
by  sorting,  even  at  considerable  expense,  all  rock  re- 
maining in  the  ore  that  will  not  pay  for  freight  and  treat- 
ment. In  other  words,  the  problem  is  not  simple,  but 
complex ;  it  is  a  question  of  maxima  and  minima,  in  which 
the  maximum  required  is  the  largest  amount  of  net  profit 
from  a  given  amount  of  gold  in  the  deposit,  while  the 
variables  are  the  cost  of  freight  and  treatment,  of  mining, 
of  sorting,  and  the  value  of  the  rejected  waste. 

Let  us  take  as  a  practical  example  a  body  of  10,000  tons 
of  ore,  running  i  oz.  gold  per  ton.    This  ore  can  be  mixed 
and   shipped   without  sorting  at  a  handsome  profit,  as 
follows : 
Gross  value  of  ore $200,000 

Cost  of  mining  10,000  tons,  at  $3  per  ton 30,000 

Freight  and  treatment,  $8.25 82,500 

Total  cost  $i  12,500 

Profit    $87,500 

But  suppose  we  reject  half  of  this  ore  by  sorting?  By 
so  doing  we  throw  away  5,000  tons  that  will  average 
$2.50  per  ton,  or  $12,500.  The  cost  of  sorting,  at  5oc.  per 
ton,  will  be  $2,500  more.  Then  our  shipment  will  be  as 
follows : 


108  THE  ECONOMICS  OF  MINING 

5,000  tons,  at  $37.50  per  ton $187,500 


Cost  of  mining  and  sorting,  $6.50  per  ton 32,500 

Freight  and  treatment,  $11.25 56,250 


Total  cost $88,750 


Profit   $98,750 

In  other  words,  the  gross  receipts  in  this  case  have 
fallen  $12,500.  The  cost  for  mining  per  ton  is  more  than 
twice  as  great ;  the  cost  for  freight  and  treatment  per  ton 
is  $3  greater ;  the  apparent  showing  by  the  superintendent 
very  bad ;  but  nevertheless  he  has  made  for  the  company 
$11,250  clear  profit  on  the  transaction. 

In  the  first  case  our  total  cost  for  mining,  freight  and 
treatment  is  only  $11.25  Per  ton>  m  tne  second  case  it  is 
$17.75  Per  ton,  but  there  is  more  money  in  the  higher 
cost.  This  is  an  example  that  has  been  worked  out  in 
practice. 

It  should  be  very  plain,  then,  that  nothing  could  be 
more  absurd  than  to  judge  the  merits  of  a  superintendent 
in  Cripple  Creek  merely  by  the  shipping  cost  per  ton  of 
his  ore.  Any  opinion  must  be  formed  on  a  good  many 
other  considerations. 

Here,  by  the  way,  I  wish  to  avoid  giving  the  impression 
— which  would  be  a  satisfaction  to  many — that  it  is  not 
worth  while  to  keep  a  close  record  of  the  costs  of  mining. 
On  the  contrary,  this  is  one  point  that  is  too  often  over- 
looked. Costs  can  be  kept  in  the  fullest  detail  at  a  merely 
nominal  expense.  A  good  system  of  cost-keeping  is  so 
absolutely  essential  that  no  property  of  any  size  can  be 
run  successfully  without  it.  No  matter  how  able  a  man 
may  be,  he  can  get  better  results  if  he  knows  just  what  it 
costs  him  to  do  his  work.  But  the  costs,  once  obtained, 
must  be  used  with  discretion,  always  bearing  in  mind 
that  the  desired  result  is  the  greatest  net  profit  in  dollars 
and  cents,  and  nothing  else. 

To  give  a  better  idea  of  the  complexity  and  cost  of 


MINING  COSTS  AT  CRIPPLE  CREEK     109 

operating  the  larger  mines  of  the  camp,  the  following 
statement  of  operations  at  one  of  the  largest  properties 
during  one  month  may  be  of  interest:  18,910  tons  of  rock 
were  mined  from  40  different  and  separate  stopes  at  a  cost 
of  $2.07  per  ton,  or  $39,068.39.  The  following  develop- 
ment work  was  done  in  addition  to  the  stoping :  2,237  ft- 
of  drifts,  cross-cuts,  winzes,  and  raises  in  46  different 
headings,  at  an  average  of  $6.91,  $15,455.21 ;  ore-soning 
and  loading  cost,  $8,999.98.  This  made  a  total  of  $63,- 
523.58.  The  total  amount  of  rock  hoisted,  both  from 
stopes  and  development  work,  was  24,931  tons,  at  $2.55, 
which  was  reduced  by  sorting  to  7,093  tons  of  shipping 
ore,  at  $8.96. 

I  think  it  not  unfair  to  say  that  these  costs  are  good, 
considering  the  conditions.  The  rock  is  not  excessively 
hard,  but  it  cannot  be  called  soft.  Part  of  the  rock  is 
ordinary,  unaltered  granite,  and  part  is  equally  hard 
porphyry.  Wages  will  average  $3.40  for  eight  hours. 
Coal  costs  about  $4.60  per  ton,  and  timber  averages  $20 
per  1,000  ft.  J.  R.  FINLAY. 

Colorado  Springs,  Col.,  Nov.  9,  1903. 


SOME  ASPECTS  OF  MINING  FINANCE— i 

(Editorial,   November   28,    1903.) 

There  is  a  good  deal  in  a  name.  If  you  call  a  company 
'A  Syndicate  for  Floating  Mines'  or  'An  Association  of 
Mining  Underwriters'  you  will  do  for  it  what  was  done 
to  the  proverbial  dog  or  the  infant  who  succumbed  to  a 
shower  of  ill-assorted  names — drowned,  as  it  were,  at  the 
very  christening.  So  relief  is  obtained  by  a  euphemism; 
the  term  'exploration  company'  is  comprehensive  and 
includes  all  sorts  of  concerns,  from  those  that  start  out 
to  develop  the  waste  places  of  the  earth  to  those  whose 
purpose  obviously  is  to  test  the  resources  of  a  credulous 
public.  They  have  become  an  institution  and  play  an 
important  part  in  the  development  of  the  mining  industry. 

Exploration  companies  are  intended  in  the  first  place, 
one  may  well  presume,  to  explore  potential  mining 
regions ;  but  their  activity  cannot  operate  in  this  direction 
for  long,  because  no  organization  can  continue  to  pay  out 
money  indefinitely;  either  the  cash,  which  is  the  first 
requisite,  gives  out  before  any  valuable  discovery  is  made, 
or  such  a  discovery,  perhaps  several  of  them,  is  made, 
and  then  it  'becomes  necessary  to  subdivide  the  interests 
into  subsidiary  companies.  Broadly  speaking,  therefore, 
the  exploration  company  becomes  a  financial  house,  which 
itself,  or  with  others,  underwrites  mining  issues  and  di- 
rects their  policy  afterward.  The  London  firm  of  John 
Taylor  &  Sons  has  been  quoted  in  New  York  in  this  con- 
nection, but  this  is  an  error,  for  that  house  is  a  private 
concern  which  undertakes  the  management  of  mines  on 
the  basis  of  a  percentage  of  the  profits. 

For  instance,  in  the  case  of  a  well-known  Tasmanian 
gold  mine — named  the  Tasmania — which  has  just  been 
brought  out  in  London  under  the  auspices  of  this  firm, 


SOME  ASPECTS  OF  MINING  FINANCE    111 

it  appears  from  the  prospectus  that  the  nominal  capital  is 
placed  at  500,000  shares  of  £i  each,  of  which  210,000  are 
offered  to  the  public  at  par;  the  price  paid  to  the  local 
company  owning  the  mine  is  £20,000  in  cash,  and  £210,000 
in  fully  paid  shares.  Intermediate  agencies  and  under- 
writing commissions  bring  the  purchase  consideration  up 
to  £320,000  in  cash  and  shares,  that  is,  £90,000  more  than 
the  amount  actually  passed  over  to  the  owners  of  the 
mine;  the  remaining  £180,000  represents  working  capital, 
subscribed  in  cash  to  an  issue  of  210,000  shares  offered  on 
the  flotation  of  the  company,  the  difference  of  £30,000 
being  cash  used  in  making  some  of  the  payments  specified. 
The  contracts  are  in  the  name  of  a  vendor  syndicate, 
which  pays  the  expenses  incidental  to  the  examination  of 
the  mine  and  the  formation  of  the  company ;  this  syndicate 
gets  247,000  shares  and  £19,500  in  cash,  out  of  which  it 
pays  for  the  mine,  giving  one  agent  5,000  shares  and 
another  intermediary,  mentioned  by  name,  another  block 
of  5,000  shares.  The  vendor  syndicate  is  practically 
identical  with  a  Colonial  Mines  Syndicate  which  under- 
takes to  subscribe  or  procure  subscriptions  for  the  210,- 
ooo  shares,  offered  for  subscription  by  the  prospectus,  in 
consideration  of  getting  £53,500,  payable  as  to  £10,500  in 
cash  and  £43,000  in  shares.  There  are  sub-underwriting 
agreements  between  the  Colonial  Mines  Syndicate  and 
various  other  parties  at  a  commission  of  25  per  cent, 
payable  as  to  one-fifth  in  cash  and  the  balance  in  fully 
paid  shares.  Thus  it  comes  to  this,  that  the  vendor  syndi- 
cate receives  37,000  shares,  out  of  which  two  of  its  agents 
get  10,000,  and  a  commission  of  about  25  per  cent  for  its 
services  in  giving  a  guarantee  to  place  210,000  shares. 
The  directors  are  holders  of  stock  in  the  syndicate  and 
participate  largely  in  the  profits  of  the  flotation,  while  also 
subscribing  (under  sub-underwriting  arrangements)  for 
the  shares  now  offered.  All  the  contracts  are  given  in  the 
prospectus  in  a  manner  which  exemplifies  the  beneficent 


112  THE  ECONOMICS  OF  MINING 

operation  of  the  Companies  Acts.  Finally,  it  is  stated  that 
John  Taylor  &  Sons,  who  individually  are  members  of  the 
syndicate,  and  two  of  whom  are  also  directors,  have 
agreed  to  serve  the  company  as  managers  and  consulting 
engineers  in  consideration  of  receiving  £850  per  annum  in 
salary,  office  rent,  etc.,  "and  in  addition  2j  per  cent  of  the 
net  profits  distributed  by  the  company  in  every  year, 
whether  in  the  shape  of  cash  or  shares,  but  such  additional 
remuneration  shall  not  exceed  in  any  one  year  the  sum  of 
£2,500."  It  appears  to  us  that  the  terms  and  conditions 
are  fair  enough  and  that  the  professional  services  of  the 
engineers  are  secured  on  a  decidedly  reasonable  basis. 
Concerning  the  value  of  the  mine,  we  can  express  no 
opinion. 

John  Taylor  &  Sons  has  existed  for  three  generations ; 
the  firm  began  by  undertaking  the  direction  of  mines,  and 
eventually  also,  in  certain  cases,  as  we  have  seen,  it  has 
assumed  part  of  the  responsibility  of  finding  the  capital 
necessary  for  their  development ;  thus  the  financial  side 
grew  out  of  the  professional.  With  the  Exploration  Com- 
pany, Ltd.,  the  purchase  of  profitable  mines  led  to  the 
technical  management  of  them  after  their  acquisition. 
Both  companies,  the  one  distinguished  by  the  possession 
of  a  lot  of  old-fashioned,  but  sound,  mining  experience, 
the  other  assisted  by  the  capital  of  a  great  Jewish  family, 
have  been  distinctly  successful.  The  Exploration  Com- 
pany is  a  limited-liability  company  which  makes  a  busi- 
ness of  promoting  mining  properties.  Ever  since  Ham- 
ilton Smith  induced  the  Rothschilds  to  take  part  in  the 
organization  of  this  company  and  it  was  followed  by  the 
Mining  and  Financial  Trust,  the  Mines  Development 
Company  and  other  similar  undertakings,  there  has  been 
a  steady  growth  in  exploration  companies  of  every  kind. 
We  refer,  of  course,  to  those  interested  in  American 
mines,  for  South  African  finance  covers  a  field  quite  apart. 

In  London  the  formation  of  land  and  finance  corpora- 


SOME  ASPECTS  OF  MINING  FINANCE    113 

tions  has  proceeded  without  limit,  a  large  part  of  the  in- 
digestible financial  paper  now  fluttering  in  that  city  being 
of  this  description ;  but  it  is  only  of  late  that  the  same 
manifestation  of  mining  activity  has  become  apparent  in 
New  York.  There  are  so  many  'American'  and  'United 
States'  and  'Mexican'  Finance,  Exploration,  Develop- 
ment, Securities,  Investment  and  Prospecting  companies 
that  it  is  extremely  difficult  to  prevent  confusion,  through 
mere  similarity  of  name,  between  the  few  substantial  con- 
cerns and  the  larger  number  of  ephemeral  creations.  This 
activity  in  the  financial  incubator  is  due  largely  to  the  suc- 
cess of  the  English  companies,  but  more  particularly  to 
the  conspicuous  position  acquired  by  the  Guggenheim  Ex- 
ploration Company,  one  of  the  many  channels  through 
which  flows  the  irrepressible  financial  energy  of  a  large 
family  of  extremely  clever  men.  Their  success  has 
prompted  others  to  organize  for  the  same  purposes.  Min- 
ing engineers  who  have  grown  gray  in  active  service  have 
viewed  with  chagrin  the  wealth  acquired  by  one  or  two 
of  their  own  profession  whom  financial  participation  has 
made  rich  in  a  few  years,  and  have  come  to  the  conclusion 
that  they,  too,  would  take  their  part  in  the  more  lucrative 
branches  of  that  many-sided,  diversified  and  elastic  occu- 
pation which  is  covered  by  the  comprehensive  term  of 
'the  mining  business/ 

Hence  the  partnership  between  engineers  and  bankers, 
engineers  and  promoters,  engineers  and  adventurers,  en- 
gineers and  irresponsible  schemers,  until  the  financial 
arena  has  become  as  much  of  a  medley  as  the  stage  of  an 
opera  at  the  moment  of  the  grand  climax.  A  man  at  forty 
is  either  his  own  doctor  or  a  fool ;  an  engineer  who  has 
surveyed  mankind  from  China  to  Peru  needs  no  advice; 
yet,  could  we  but  presume  on  friendship,  we  would  say 
to  him  that  the  promotion  of  companies  is  entirely  outside 
his  professional  training  and  is  best  left  to  those  that  are 
bred  to  the  business.  Many  a  good  engineer  has  been  lost 


114  THE  ECONOMICS  OF  MINING 

in  the  unsuccessful  promoter ;  one  man,  with  more  of  the 
financial  instinct  than  the  professional,  wins ;  but  for  every 
such  case  a  hundred  wreck  their  careers  in  their  eagerness 
to  drive  cross-cuts  to  wealth. 

It  is  a  difficult  problem;  the  engineer  is  entitled  to  his 
share  of  the  profits  of  mining,  and  he  should  receive  a  re- 
ward no  less  than  that  of  the  promoter.  Should  he  there- 
fore become  a  partner  with  the  capitalist?  The  same 
question  has  often  arisen  as  between  the  architect  and  the 
contractor;  an  architect  can  join  with  the  contractor  in 
the  risks  of  the  building  trade;  he  may  himself  become 
a  contractor  and,  not  content  with  making  drawings  only, 
proceed  to  build  the  structures  which  he  designs.  Never- 
theless, the  division  of  the  work  and  the  separation  be- 
tween the  two  occupations  is  to  the  gain  of  the  individual, 
no  less,  than  of  the  community.  It  is  again  a  question 
whether  the  shoemaker  should  stick  to  his  last  or  take  up 
a  task  which  belongs,  by  fitness  and  by  custom,  to  the 
tailor. 


SOME  ASPECTS  OF  MINING  FINANCE-II 

(Editorial,   December   5,    1903.) 

We  have  seen  more  than  one  prospectus,  issued  of 
late  by  exploration  companies  organized  in  New  York, 
in  the  pages  of  which  reference  has  been  made  to  the 
successes  of  similar  undertakings  in  London  and  else- 
where. Several  English  organizations  are  quoted  by 
name  as  examples  of  this  kind  of  business  activity,  but  it 
indicates  how  little  is  known  concerning  the  ins  and  outs 
of  the  London  arena,  when  three  or  four  corporations, 
of  entirely  dissimilar  character  and  methods,  are  given 
as  models  for  American  enterprise.  On  the  other  hand, 
the  mere  fact  that  London  has  been  the  leading  mining 
market  of  the  world  since  the  modern  development  of 
mining  began,  warrants  our  turning  thither  for  examples 
of  well  considered  methods  in  the  management  of  finan- 
cial organizations.  By  the  mining  men  of  this  country, 
the  Exploration  Company  has  long  been  held  as  the 
typical  London  house  making  a  business  of  promoting 
mining  undertakings.  In  many  respects  there  is  a  war- 
rant for  this,  although  it  must  not  be  assumed  that  even 
this  highly  reputable  concern  has  been  uniformly  suc- 
cessful. A  few  years  ago  it  illustrated  the  dangers  of 
ill-considered  arid  reckless  finance,  by  taking  up  mines 
in  Australia,  for  instance,  without  much  regard  for  busi- 
ness caution;  and  finally  embarked  in  tramway  enter- 
prises in  Paris  which  entailed  a  loss  of  fully  $3,500,000. 
The  Exploration  Company  has  paid  for  its  experience, 
and  in  returning,  of  late,  to  conservative  mining,  it  has 
recovered  much  of  the  ground  lost  during  a  period  of 
poor  administration.  Experience  teaches,  and  whatever 
methods  this  company  may  now  employ  are  those  there- 
fore which,  after  trial,  appear  most  likely  to  eliminate 


116  THE  ECONOMICS  OF  MINING 

the  risks  of  mining  as  much  as  possible,  while  at  the 
same  time  giving  that  quid  pro  quo  which  is  the  essence 
of  sound  business. 

Some  of  the  recent  methods  adopted  in  connection 
with  well-known  mines  will  prove  suggestive  to  those 
who  may  set  out  on  the  same  quest. 

When  the  Exploration  Company  acquired  El  Oro 
mine  they  took  an  option  to  purchase,  from  Mr.  Haggin 
and  his  partners,  the  whole  of  the  shares  of  the  Ameri- 
can Mining  Company,  which  owned  El  Oro  mine,  and 
then  formed  the  English  company  with  a  capital  of 
£900,000;  this  represented  the  cash  purchase  considera- 
tion for  the  property,  plus  working  capital,  and  left  some 
few  thousand  shares  unissued,  in  the  hands  of  what  is 
now  El  Oro  Mining  &  Railway  Company.  In  other 
words,  the  Exploration  Company  turned  over  the  prop- 
erty complete  to  the  English  organization  at  absolute 
cost  and  without  adding  a  dollar  by  way'  of  profit,  and, 
in  addition  to  all  this,  itself  defrayed  the  cost  of  registra- 
tion and  all  the  expenses  incidental  to  the  formation  of 
the  new  company.  The  Exploration  Company  then 
solicited  subscriptions  from  its  friends  in  London  toward 
the  capital  of  El  Oro  Mining  &  Railway  Company, 
charging  them  5  per  cent,  or  one  shilling  per  share, 
which  represented  the  Exploration  Company's  profit; 
but  inasmuch  as  the  vendors  took  a  large  number  of 
shares  in  lieu  of  cash,  and  could  not,  therefore,  be  asked 
to  pay  this  one  shilling  per  share,  and  as,  of  course,  the 
amount  subscribed  by  the  Exploration  Company  itself 
did  not  represent  any  profit  (as  it  also  had  to  pay 
commissions,  expenses,  flotation  charges,  and  so  forth, 
out  of  the  profit  it  did  receive  in  this  manner),  the  net 
gain  of  this  large  transaction  did  not  exceed  £15,000. 
It  is  perhaps  the  only  instance  in  which  an  English  com- 
pany has  acquired  a  property  at  absolute  bedrock  cost; 
and,  barring  that  satisfactory  result  of  the  transaction, 


SOME  ASPECTS  OF  MINING  FINANCE      117 

it  cannot  be  said  that  this  method  of  treating  a  property 
is  a  good  precedent  or  a  reasonable  business  proposition. 

In  the  case  of  the  Tomboy  mine,  the  Exploration 
Company  followed  what  is  known  in  London  as  the 
Hamilton  Smith  practice;  that  is  to  say,  they  purchased 
51  per  cent  of  the  shares  of  the  American  company,  and 
merely  subscribed,  and  induced  their  friends  to  sub- 
scribe, for  the  shares  in  that  company.  Subsequently, 
rinding  this  scheme  did  not  work  at  all,  they  persuaded 
the  American  directors  to  sell  out  the  whole  business  to 
a  company  formed  in  London,  and  the  American  stock- 
holders now  hold  shares  in  the  English  company,  in- 
stead of  the  English  stockholders  holding  shares  in  the 
American.  This  is  also  a  practice  which  does  not  at  all 
commend  itself ;  for,  while  51  per  cent,  of  course,  gives  the 
control  of  a  property,  it  is  obvious  that  the  sale  of  a  few 
thousand  shares  will  transfer  that  control. 

The  practice  now  adopted  by  the  Exploration  Com- 
pany is  approximately  as  follows:  If  a  mining  property 
is  brought  to  the  notice  of  any  one  of  its  representatives, 
and  he  (an  engineer)  is  satisfied  with  the  preliminary  in- 
vestigation, they  arrange  to  take  an  option  upon  the 
property,  preferably  for  about  three  months;  and  if  it 
then  holds  up  to  a  complete  and  searching  examination, 
they,  prior  to  the  expiration  of  the  option,  form  a  com- 
pany in  London  to  acquire  the  mine,  making  themselves 
responsible  for  the  purchase,  offering  to  their  friends  a 
participation  in  the  underwriting,  for  which  probably  a 
commission  of  5  per  cent  in  cash  is  paid;  then  they  make 
a  public  issue,  and  if  the  business  is  of  sufficient  dimen- 
sions, they  reserve  a  certain  number  of  shares  for  prefer- 
ential allotment  to  the  shareholders  of  the  Exploration 
Company,  should  they  be  disposed  to  make  application 
for  the  same. 

The  capital  of  such  a  new  company  is  fixed  at  the  cost 
price  of  the  property,  plus  whatever  may  be  necessary 


118  THE  ECONOMICS  OF  MINING 

for  working  capital ;  and,  in  addition,  a  sum  from  5  to 
10  per  cent,  according  to  the  size  of  the  property,  is 
set  aside  as  the  promoters'  (Exploration  Company's) 
profit;  unless  a  mine,  on  examination,  shows  that  it  can 
stand  such  promoters'  profit,  and  still  present  a  good 
mining  chance  of  giving  the  shareholders  their  money 
back  with  a  substantial  rate  of  interest,  it  is  not  consid- 
ered good  enough  to  put  on  the  market.  Of  course  the 
amount  of  commission  which  the  promoters  should  add 
to  the  purchase  price  would  very  largely  depend  upon 
the  size  of  the  property,  for  what  might  be  a  reasonable 
percentage  on  a  purchase  price  of  $500,000  would  be 
excessive  and  unreasonable  on  a  property  of  $5,000,000. 
The  phrase  'underwriting  the  capital'  means  that  the 
organization  bringing  out  a  company  with  a  capital,  say, 
of  £  i, 000,000;  would  by  themselves  and  their  friends  un- 
dertake to  subscribe  for  the  whole  or  any  portion  of  the 
capital  not  taken  by  the  public,  and  in  consideration  for 
sudh  guarantee  they  would  be  paid  an  underwriter's 
commission  of,  say,  5  per  cent.  The  foregoing,  of  course, 
only  applies  to  mining  properties  too  big  for  the  promot- 
ing organizations  to  handle  alone ;  but  in  the  case  of  any 
mine  which  could  be  purchased  and  equipped  for,  say, 
$500,000,  or  even  $1,000,000,  if  the  property  was  consid- 
ered to  have  attractive  prospects,  the  Exploration  Com- 
pany would  be  much  disposed  to  take  the  whole  for  its 
own  account,  and  work  it  as  a  private  business. 


SOME  ASPECTS  OF  MINING  FINANCE— III 

(Editorial,  December  17,  1903.) 

We  have  described  some  of  the  methods  adapted  by 
conservative  houses  engaged  in  the  acquisition  of  min- 
ing property.  There  are  several  well-managed  financial 
organizations  in  London,  such  as  the  Consolidated  Mines 
Selection  Company,  which  do  not  float  mines  'off  their 
own  bat/  as  it  were,  because  a  single  undertaking  of  any 
magnitude  would  entail  the  absorption  of  most  of  their 
capital;  therefore,  instead  of  using  up  their  resources  in 
one  big  deal,  they  participate  in  several  ventures.  Either 
they  obtain  an  allotment  of  interest  in  a  business  about 
to  be  issued  by  another  house,  and,  having  had  the 
mine  examined  by  their  own  engineer,  they  accept  the 
participation;  or,  their  agent  having  secured  an  option 
on  a  likely-looking  property,  they  offer  it  to  a  larger 
concern  and  obtain  a  consideration,  as  well  as  a  partici- 
pation, for  their  instrumentality  in  introducing  a  profit- 
able deal.  Furthermore,  many  successful  companies  of 
this  kind  do  not  buy  mines  at  all,  but  purchase  blocks  of 
shares  on  the  open  market,  after  their  engineer  has  in- 
vestigated conditions  at  the  mines ;  that  is,  they  maintain 
a  staff  of  trustworthy  engineers  and  obtain  correct  in- 
formation concerning  the  ore  reserves  and  future  pros- 
pects of  mining  properties  already  listed  on  the  ex- 
change, utilizing  this  first-hand  knowledge  to  acquire  an 
interest  whenever  the  quoted  price  warrants  a  purchase. 
Should  their  holding  become  large,  they  can  usually  ar- 
range to  obtain  representation  on  the  directorate  of  the 
mining  company. 

The  Consolidated  Mines  Selection  Company  is  the  re- 
sult of  the  amalgamation  of  the  African  Metals  Com- 
pany and  an  older  exploration  company,  organized  by 


120  THE  ECONOMICS  OF  MINING 

Mr/  Walter  McDermott,  named  the  Mines  Selection 
Company. 

The  Mining  and  Financial  Trust  may  also  be  quoted 
as  having  been  founded  on  a  sensible  basis,  and,  al- 
though it  is  a  concern  which  has  withdrawn  into  the 
privacy  of  inactivity,  it  played  an  important  part  in  the 
development  of  many  celebrated  American  mines, 
among  which  the  De  Lamar,  in  Idaho;  the  Elkhorn,  in 
Montana,  and  the  Harqua  Hala,  in  Arizona,  may  be  in- 
stanced. Mr.  T.  A.  Bennett  was  the  founder  of  this 
company.  He  gave  his  services  as  mining  engineer  on 
the  understanding  that  he  was  to  receive  no  salary  or 
retainer,  but  a  large  share  in  any  business  resulting  from 
his  active  search  for  a  good  mine  at  a  fair  price.  He 
stipulated  only  that  his  expenses  should  be  paid  when 
he  was  actually  in  the  field.  This  was  a  fair  and  practi- 
cal scheme.  It  worked  successfully,  until  the  disap- 
pointment of  the  Harqua  Hala  gave  a  severe  check  to 
the  further  expansion  of  the  company. 

The  Mines  Company,  Ltd.,  was  another  concern  which 
took  an  important  part  in  American  mining.  It  was 
formed  by  Mr.  John  Darlington  and  others,  and  was 
responsible  for  bringing  out  the  Yankee  Girl,  New  Gus- 
ton  and  American  Belle  mines  at  Red  Mountain,  Colo- 
rado, but  it  lost  its  standing  through  the  over-capitali- 
zation which  marked  the  last  of  these  three  important 
flotations. 

Then,  there  are  all  sorts  of  venturesome  concerns, 
which  make  a  brief  splash  or  a  long-continued  splutter, 
following  risky  methods  which  may  be  described  as 
financing  on  the  edge  of  a  razor.  Every  once  in  a  while 
they  get  a  brief  notoriety,  commencing  in  the  financial 
press  and  ending  in  the  police  court.  Several  exposures 
of  folly  and  trickery  have  discredited  mining  during 
recent  years,  but  the  dreary  messes  of  Bottomley,  Hooley 
and  Wright  are  brushed  aside  as  episodes  to  be  forgot- 


SOME  ASPECTS  OF  MINING  FINANCE      121 

ten  with  the  indecency  of  a  hurried  funeral.  In  truth, 
they  represent  but  the  more  extreme  forms  of  reckless 
finance,  which  are  no  more  a  part  of  legitimate  mining 
than  the  iniquities  of  the  race-course  are  necessarily  a 
part  of  the  business  of  breeding  good  horses. 


SOME  ASPECTS  OF  MINING  FINANCE— IV 

(Editorial,  December  24,   1903.) 

Many  'development'  and  'exploration'  companies, 
which  start  with  good  intentions,  slide  down  an  easy 
descent  into  wrong-doing,  merely  from  the  lack  of  funds. 
Let  the  organizers  of  such  enterprises  realize  this  brutal 
fact :  you  cannot  finance  legitimately  without  money.  To 
such  gentlemen  as  are  organizing  'exploration'  companies 
we  would  give  the  advice  which  the  Austrian  general, 
'Monticucoli,  is  said  to  have  given  to  Maria  Theresa,  when 
he  told  her  that  three  things  were  necessary  for  waging 
war  successfully— the  first  was  money,  the  second  was — 
money,  and  the  third  was — money!  Unless  a  financial 
company  has  funds  sufficient  to  carry  out  its  undertak- 
ings, it  will  either  be  squeezed  against  the  hard  wall  of 
adversity,  or  it  will  stoop  to  questionable  practices.  It  is 
as  difficult  for  a  promoting  concern  to  be  uniformly  hon- 
orable, when  trying  to  carry  out  big  undertakings  with  a 
small  capital,  as  it  is  for  the  wicked  man  to  enter  heaven. 
No  array  of  names,  or  multiplicity  of  business  interests, 
will  suffice.  The  malice  des  choses,  which  pursues  the 
poor  financial  company  trying  to  push  large  operations,  is 
one  of  the  brutalities  of  existence. 

On  the  other  hand,  the  utilization  of  a  very  large  capi- 
tal, in  actual  purchase  of  properties,  is  not  within  the 
scope  of  the  typical  exploration  company.  Such  action 
leads  to  a  crippling  of  resources,  because  it  requires  the 
further  use  of  funds  in  the  support  of  the  market  for  its 
own  issues.  A  company  which  brings  out  a  big  mine,  and 
becomes  itself  a  large  purchaser  of  the  stock,  is  apt  to  be 
the  butt  of  successful  bear  attacks,  unless  it  is  in  a  position 
to  protect  its  holdings.  The  story  of  Lake  View  Consols, 
Le  Roi,  and  other  mines  which  have  suffered  aueer  vicissi- 


SOME  ASPECTS  OF  MINING  FINANCE      123 

tudes  on  the  stock  exchange,  illustrates  how  dangerous 
it  is  for  an  issuing  house  to  be  'long'  on  its  own  shares. 

An  exploration  company,  primarily,  is  not  an  invest- 
ment corporation,  but  a  house  of  issue ;  its  most  profitable 
avenue  of  energy  is  in  scouting  for  good  mines,  in  order, 
by  sifting  a  large  number  of  likely  properties,  to  secure 
the  option  finally  on  one  which,  after  thorough  examina- 
tion, it  can  commend  to  its  clients.  In  this  business,  as  in 
all  others,  it  is  a  mistake  to  confuse  the  operations  of  a 
broker  with  those  of  a  principal.  The  exploration  com- 
pany will  find  it  advantageous  to  act  mainly  as  a  corporate 
broker,  for  the  buying  and  selling  of  mines.  Therefore,  a 
capital  sufficient  for  active  scouting,  and  the  thorough 
investigation  which  comes  after  picking  out  the  mines 
that  warrant  it,  together  with  necessary  payments  for 
options,  should  suffice.  A  capital  of  £100,000,  or  $500,- 
ooo,  should  be  ample  for  all  work  of  this  kind,  during  a 
period  of  several  years,  but  it  must  be  available  as  cash. 
With  such  a  capital,  it  is  possible  to  pay  a  50  per  cent  divi- 
dend on  the  completion  of  a  successful  deal,  while,  at  the 
same  time,  there  is  money  enough  to  meet  the  expenses 
of  a  prolonged  and  extensive  search  for  that  most  desir- 
able business — a  profitable  mine  with  possibilities  of  de- 
velopment. 

Having  finally  found  and  secured  a  good  mine  at  a  fair 
price,  the  next  step  requires  as  much  judgment  as  any 
which  have  preceded.  Companies  which  try  to  make  a 
grand  coup  on  one  transaction,  regardless  of  rhyme  or 
reason,  always  meet  with  a  most  miserable  smash  sooner 
or  later — usually  sooner.  In  these  matters,  as  in  most  of 
the  affairs  of  life,  it  is  both  right  and  good  policy  to  take 
a  large  view  of  business,  and  build  it  up  by  uniformity  of 
fair  dealing  and  cautious  finance.  A  company  which  can 
make  two  'or  three  sound  deals,  without  over-capitalizing 
a  mine  or  sand-bagging  a  mine-owner,  is  assured  of  a 
prosperous  career,  for  such  a  reputation  will  bring  to  its 


124  THE  ECONOMICS  OF  MINING 

office  a  large  share  of  the  best  mines  that  come  to  market. 
On  the  other  hand,  experience  shows  that,  with  rare  ex- 
ceptions, most  finance  companies  which  have  made  one  or 
two  successful  flotations  become  so  greedy  that  they  pn> 
ceed  to  over-capitalize  their  next  issue,  and  strain  to  make 
so  large  and  quick  a  profit  as  to  end  in  a  miserable  fiasco. 
The  American  Belle  flotation  (which  was  brought  out 
when  the  Guston  and  Yankee  Girl  mines  had  won  a  repu- 
tation for  the  Red  Mountain  district,  and  to  the  company 
which  issued  them)  is  a  case  in  point. 

But  we  are  treading  on  dangerous  ground,  where 
guides  do  well  in  warning  the  wayfarer  while  refusing 
themselves  to  go  forward.  In  these  matters  an  intelli- 
gent cognizance  of  what  has  happened  to  others  is  much 
cheaper  than  the  bitter  pill  of  experience,  which  is  the  in- 
evitable medicine  doled  out  to  the  heedless  and  unwary 
who  tread  along  the  difficult  path  of  mining  finance.  At  a 
time  when  new  exploration  companies  of  every  kind  are 
being  organized  in  New  York,  it  will  not  be  held  im- 
proper to  dwell  upon  the  dangers  which  they  may 
encounter,  the  success  which  they  may  win,  and  the 
stimulus  they  can  afford  to  legitimate  mining. 


SOME  ASPECTS  OF  MINING  FINANCE— V 

(Editorial,  December  31,   1903.) 

One  form  of  unpractical  finance  which  is  prevalent  in 
this  country  is  unknown  in  England.  We  refer  to  the 
organization  of  companies  with  a  large  nominal  capital, 
say,  1,000,000  shares,  a  part  of  which  is  given  out  as 
fully  paid  stock  in  exchange  for  the  mine,  while  the  bal- 
ance is  peddled  at  a  big  discount  to  the  public  in  order 
to  secure  working  capital,  and,  in  many  cases,  to  make 
a  quick  profit  for  the  concern  at  the  back  of  the  opera- 
tion. Such  practices  are  rendered  impossible  in  England 
by  the  Companies  Acts,  regulations  covering  the  organi- 
zation and  procedure  of  corporate  enterprise.  Under 
the  lax  statutes  obtaining  in  several  States  a  syndicate 
can  take  over  a  small  mine  or  a  mere  prospect,  organize 
a  $1,000,000  company,  pay  the  owners  (themselves,  it 
may  be)  550,000  shares,  carrying  no  liability,  and  sell  the 
minority  interest  or  remainder  of  the  stock  at  10  or  15 
cents;  sometimes  even  less,  especially  when  a  'fiscal 
agency/  as  the  promoting  concern  is  apt  to  call  itself, 
represents  a  number  of  mines  in  course  of  development 
and  'pools'  the  various  shares  so  as  to  make  a  combina- 
tion or  'bargain'  offer,  in  order  to  procure  the  money 
needed  to  make  mines  out  of  holes  in  the  ground.  The 
price  of  the  stock  is  raised  according  to  the  circum- 
stances, and  among  these  circumstances  the  needs  of 
the  mine  are  apt  to  be  less  of  a  measure  than  the  facility 
with  which  the  stock  can  be  sold  to  simple-minded  peo- 
ple in  a  fool's  hurry  to  get  rich. 

There  is  an  enormous  amount  of  money  subscribed, 
and  mostly  lost,  in  this  way  during  the  course  of  a  year, 
especially  among  servant  girls,  clerks,  railroad  conduc- 
tors, tradesmen%and  hard-working  people  with  small  sal- 


126  THE  ECONOMICS  OF  MINING 

aries.  Iowa,  Illinois,  Indiana,  and  the  regions  most  out 
of  touch  with  precious  metal  mining,  are  fertile  fields  for 
enterprising  organizers  of  such  schemes.  Office-holders 
of  local  repute,  or  other  persons  of  some  notoriety,  are 
made  directors  and  are  given  blocks  of  stock,  to  the 
intent  that  they  may  serve  as  lures  to  the  people  in  vari- 
ous localities.  Then  reports  of  progress  are  sent  in  by 
self-constituted  'experts,'  and  'dividends'  are  declared, 
out  of  the  subscriptions,  so  as  to  hasten  the  instalments 
on  the  stock;  for  it  is  usually  sold  on  this  plan,  so  much 
per  month  out  of  the  earnings  of  comparatively  poor  in- 
dividuals. These  are  the  undertakings .  which  are  liber- 
ally advertised  in  the  daily  press  and  in  the  illustrated 
weeklies. 

During  the  recent  prosecution  of  a  notorious  mining 
promoter,  it  was  shown  that  out  of  1,250,000  shares, 
valued  at  $i  per  share,  in  a  company  operating  a  mine 
in  Oregon,  there  were  issued,  and  held,  25  shares  in 
California,  14  in  Canada,  n  in  Delaware,  106  in  Illinofs, 
25  in  Indiana,  422  in  Iowa,  61  in  Kansas,  16  in  Maine,  27 
in  Maryland,  63  in  Massachusetts,  14  in  Mississippi,  49 
in  Missouri,  48  in  Nebraska,  18  in  Minnesota,  16  in  New 
Jersey,  68  in  New  York,  95  in  Pennsylvania,  70  in  Wash- 
ington, 50  in  Wisconsin,  and  the  remainder  in  other 
States  of  the  Union.  This  distribution  suggests  forcibly 
what  efforts  must  have  been  made  to  sell  the  shares 
wherever  a  gullible  head  bobbed  up. 

The  favorite  scheme  for  such  undertakings  is  a  'tun- 
nel' or  adit  which  is  to  pierce  a  mountain  and  intercept 
large  numbers  of  veins.  A  string  of  mining  claims  is 
easily  secured  for  a  merely  nominal  sum  in  a  half-de- 
serted portion  of  some  well-known  mining  district,  and 
any  present  unproductiveness  is  explained  by  excess  of 
water,  cost  of  shaft-sinking  and  other  drawbacks,  which 
are  to  be  removed  through  the  facilities  afforded  by 
such  a  drainage  adit.  Ideal  cross-sections  exhibiting  a 


SOME  ASPECTS  OF  MINING  FINANCE      127 

multiplicity  of  veins,  an  extremely  steep  contour  of  the 
surface,  and  ore  reserves  commensurate  with  tremen- 
dous 'backs,'  are  added  to  highly  colored  descriptions  of 
the  future  of  the  undertaking.  Shares  are  offered  at  10 
cents,  to  be  increased  to  25  cents  within  a  specified  pe- 
riod, and  other  advances  may  ensue,  dependent  upon  the 
replies  evoked  by  the  circulars  which  are  sent  out,  and 
the  advertisements  and  favorable  reading  notices  which 
appear  in  all  kinds  of  papers,  religious  and  old-fashioned 
periodicals  being  preferred  by  this  type  of  promoter.  A 
rather  unique  method  of  advertising  a  gigantic  mining 
swindle  some  time  ago  was  the  sending  of  'lecturers' 
throughout  the  country  on  a  special  railroad  car;  the 
duty  of  these  fakirs  was  to  tell  the  unsuspecting  inhab- 
itants of  the  smaller  towns  how  fortunes  had  been  made 
by  investors  in  mining  shares,  and  to  expatiate  upon  the 
millions  that  lay  idle  in  the  'treasure  vaults'  of  the 
property,  the  stock  of  which  was  offered  at  'rock-bot- 
tom' prices.  As  the  work  at  the  mine  proceeds,  the  im- 
patience of  the  ignorant  investor  is  fed  with  accounts  of 
rich  strikes,  veins  one  inch  thick  crossing  a  working 
5  ft.  wide  being  likely  to  appear  as  'ore  5  ft.  across/ 
while  assays  of  specimens  of  walnut  size  are  quoted 
under  the  guise  of  'averages/  When,  eventually,  some 
of  the  subscribers  cease  to  send  in  their  instalments,  they 
forfeit  their  interest,  and  the  anxiety  of  the  survivors  is 
allayed  by  reports  of  'well-known  experts'  and  'profes- 
sors/ who  are  vouched  for  by  State  officials  or  country 
bank-managers  in  a  magnificently  vague  manner  per- 
mitting of  easy  retreat.  Sometimes  a  withered  enter- 
prise will  receive  a  new  lease  of  life  by  reorganization  or 
consolidation  with  another  property  equally  worth- 
less, and  the  unsophisticated  shareholder  is  again  called 
on  to  contribute  by  surrendering  his  old  stock  and  pay- 
ing an  additional  fee  for  the  new  shares.  And  so  the 
mockery  of  mining  goes  on,  until  the  money  subscribed 


128  THE  ECONOMICS  OF  MINING 

has  all  been  used  up  in  salaries  for  the  insiders,  and 
finally  a  hole  in  the  ground  with  a  dump  is  seized  by  an 
irate  stockholder,  whose  first  touch  breaks  down  the 
whole  house  of  cards — marked  cards,  at  that.  The  South 
Sea  bubble  and  its  associated  frauds  of  the  year  1720  have 
many  a  counterpart,  even  in  this  day  and  generation. 
What  we  chiefly  object  to  is,  they  are  described  as 
mining. 


MINING  FINANCE. 

(December    10,    1903.) 

The  Editor. 

SIR — I  hope  that  your  articles  on  'Mining  Finance/ 
recently  published  in  the  JOURNAL,  will  be  widely  read, 
and  will  serve  to  give  the  public  better  ideas  on  that  sub- 
ject, and  especially  on  the  proper  function  of  exploration 
companies.  The  public,  even  that  portion  which  con- 
cerns itself  at  all  about  the  subject,  has  very  hazy  ideas 
of  mining  finance.  I  have  even  met  mining  engineers, 
who  were  well  up  in  their  profession,  but  were  rather 
like  a  sailor  on  horseback  when  it  came  to  the  financial 
part.  If  people  who  have  money  to  invest  would  only 
look  into  this  matter  more,  there  would  be  fewer  com- 
plaints about  mining  investments.  How  often  we  have 
seen  fairly  good  mining  propositions  hampered  by  capital 
out  of  all  proportion  to  their  value;  and,  on  the  other 
hand,  we  have  seen  mines  kept  back  in  their  development 
for  want  of  money,  which  could  be  well  spent  upon  them. 

I  was  specially  interested  in  what  you  have  said  about 
exploration  companies  and  their  proper  functions.  The 
popular  mind  has  been  somewhat  confused  on  this  point. 
Quite  a  number  of  people,  I  find,  have  a  general  idea  that 
an  exploration  company  is  something  like  the  'holding 
company' — that  pernicious  modern  device,  which  has 
played  such  a  malignant  part  in  railroad  and  industrial 
finance,  in  the  last  two  or  three  years.  We  have  one  con- 
spicuous example  of  the  'holding  company'  in  mining, 
which  many  investors  know  to  their  sorrow.  The  less 
said  about  it  the  better ;  it  is  certainly  not  an  exploration 
company. 

The  greater  part  of  the  public  knows  the  exploration 
company  only  through  the  glowing  advertisements  of  the 
promoters  and  stock  peddlers,  whose  brilliant  imagina- 
tions have  seized  upon  the  idea  of  exploration  and  finance 


130  THE  ECONOMICS  OF  MINING 

companies  as  capital  devices  to  aid  in  fleecing  the  unsus- 
pecting outsider.  The  very  titles  are  alluring,  and  they 
permit  the  use  of  gorgeous  prospectuses,  unhampered  by 
any  regard  for  truth.  If  the  promoter  has  one  particular 
mine  to  describe,  he  finds  inconvenient  limitations;  the 
possibilities  of  finding  an  indefinite  number  give  his  men- 
dacity full  scope.  But  this  is  inevitable,  since  all  good 
things  may  be  perverted  to  evil  ends ;  and  this  incidental 
abuse  does  not  destroy  their  real  usefulness. 

It  does  not  seem  to  me  that  we  have  ever  had  a  really 
satisfactory  mining  market  in  this  country.  I  do  not 
mean  by  this  a  mining  stock  market,  but  a  market  in 
which  mines,  or  good  properties,  can  be  disposed  of  in  a 
satisfactory  way.  The  prospector,  or  the  mining  engineer, 
who  has  a  promising  mineral  property,  needing  capital  for 
its  development,  often  does  not  know  where  to  go.  If  he 
has  no  friends  with  money,  it  is  not  an  easy  matter  to  se- 
cure his  capital  or  dispose  of  his  property.  Too  often 
he  falls  a  victim  to  the  promoter  or  to  a  broker  of  the 
conscienceless  class,  who  reaps  all  the  profits.  The  ex- 
ploration company — or  companies,  for  there  is  room  for 
more  than  one  or  two — of  the  right  kind  would  help  very 
materially  in  making  the  market  that  is  wanted.  Such 
companies,  too,  when  well  established,  would  be  in  a  posi- 
tion to  command  the  attention  of  investors,  large  and 
small.  Of  course,  they  will  be  liable  to  make  mistakes 
sometimes;  but,  with  any  sort  of  good  management,  the 
proportion  of  such  failures  will  not  be  large. 

I  hope  you  will  be  able  to  develop  further  these  ideas, 
which  I  have  expressed  in  what,  I  fear,  is  a  rather  incon- 
sequent way.  I  want  to  see  general  investment  in  mines 
increase ;  for  I  know  that,  if  reliable  ways  of  doing  it  are 
provided,  such  investments  will  be  far  better  for  the  pub- 
lic than  the  putting  of  their  money  into  blind  pools  and 
watered  industrials.  INVESTOR. 

New  York,  Dec.  6,  1903. 


RESUING  IN   UNDERGROUND  WORK. 

(December  10,    1903.) 

The  Editor. 

SIR — The  article  appearing  in  your  issue  of  September 
12  (referring  to  the  origin  of  the  term  'resue'  as  applied  to 
underground  work)  brings  to  mind  some  practical  experi- 
ments carried  out  by  the  writer  a  few  years  ago,  in  which 
an  attempt  was  made  to  determine  the  relative  merits  of 
this  system  of  dealing  with  narrow  veins  of  high  grade, 
as  against  the  method  of  breaking  the  reef  and  adjoining 
rock,  together  with  an  idea  of  sorting  out  a  high  per- 
centage of  the  non-auriferous  product.  In  the  cases  cited 
the  adjoining  rocks,  or  walls,  of  the  vein  contained  no 
gold,  the  inclination  of  the  vein  was  85°  from  the  hori- 
zontal, and  the  section  of  footwall  taken  out  in  the 
first  instance  was  .separated  from  the  vein  by  a  clear  plane 
and  was  broken  without  disturbing  the  ore.  The  average 
width  of  heading  or  breast  in  the  first  operation  was  30  in. 
and  the  total  width  of  stope  after  the  reef  had  been  ex- 
tracted was  36  in.  In  the  second  operation  the  maximum 
average  width  of  stope  was  30  inches. 

The  two  methods  were,  respectively,  as  follows : 

When  resuing  was  applied,  the  vein  was  first  stripped 
on  the  footwall  (which,  in  this  case,  was  the  more  eco- 
nomical to  handle)  to  a  width  of  30  in.  This  waste  rock 
was  used  largely  as  filling,  although  a  certain  percentage 
was  necessarily  sent  to  the  surface.  When  some  3,600 
sq.  ft.  of  quartz  had  been  stripped,  this  was  broken  down 
as  a  clean  product,  so  that  no  sorting  was  required. 

In  the  second  case,  the  quartz  and  adjoining  rock  were 
broken  together,  and  the  fineness  to  which  this  product 
was  reduced  allowed  of  sorting  out  only  5  per  cent  of  the 
barren  rock. 

The  following  figures  are  compiled  from  these  experi- 


132  THE  ECONOMICS  OF  MINING 

ments,  and  although  the  period  over  which  the  work  was 
extended  was  of  necessity  limited,  and  is  possibly  not  an 
absolute  guide  as  to  what  the  work  should  cost  under 
similar  conditions  over  large  areas,  they  indicate  the  most 
profitable  method  of  handling  ore  occurring  under  these 
conditions. 

Example  A  shows  a  loss  of  $23.76  on  the  operation, 
while  in  B,  where  resuing  is  resorted  to,  a  profit  of 
$1,469.40  is  made.  In  both  cases  6  in.  of  quartz  was 
dealt  with. 

In  the  second  comparison,  C  and  D,  a  12-in.  vein  val- 
ued at  30  dwt.  was  worked,  and  while  the  discrepancy  is 
not  so  marked,  it  is  shown  that  under  these  conditions 
there  is  still  a  considerable  margin  in  favor  of  resuing. 
The  last  example,  E,  is  purely  theoretical,  as  far  as  the 
percentage  sorted  is  concerned,  and  is  given  in  further 
support  of  the  contention  held. 

Comparisons  Between  Stripping  Narrow  Reefs  and  Stoping 
Them  with  Waste. 

Example  A.— Width  of  reef,  6  in.;  value,  50  dwt.  Stoping 
width,  30  in. ;  value,  10  dwt.  One  ton  contains  20  per  cent  of  reef 
and  80  per  cent  of  waste ;  5  per  cent  is  sorted,  5  per  cent  of  So 
per  cent  is  4,  leaving  76  per  cent  of  the  waste.  So  that  96  per 
cent  goes  to  the  mill  with  a  value  of  10.41  dwt.  per  ton.  Recov- 
ery equals  75  per  cent  of  10.41  dwt. ;  that  is,  7.8  dwt.  at  $0.96, 
which  is  $7.49.  One  hundred  tons  at  $7.49  is  $749.  On  a  basis  of 
100  tons  milled  it  is  necessary  to  charge : 

To  mining      104  tons  at  $3.60 $374.40 

tramming  104  0.36 37-44 

hoisting     104  0.18 18.72 

milling       100  1.44 144.00 

0.72 72.00 

0.66 66.00 

0.60..  60.00 


redemption, 
charges,  general, 
pumping 


Total  expenses  for  100  tons $772 . 56 

Value  of  gold  recovered,  100  tons 748.80 

Loss    $23.76 

Example  B. — Stripping  30  in.  of  waste  and  mining  6  in.  of 
clean  reef.  Width  of  reef,  6  in. ;  value,  50  dwt.  per  ton.  Recov- 
ery, 75  per  cent  of  50  dwt. ;  that  is,  37.5  dwt.  at  $0.96,  or  $36.  On 
a  basis  of  100  tons  at  $36,  $3,600,  it  is  necessary  to  charge : 


RESUING  IN  UNDERGROUND   WORK     133 

To  mining  500  tons  of  waste,  at  $2.40 $1,200.00 

milling  100  tons  of  reef,  at  $3.60 360.00 

handling  no  tons  of  waste,  at  $0.48 52.80 

tramming  100  tons  of  reef,  at  $0.36 36.00 

hoisting  100  tons  of  waste,  at  $18 18.00 

hoisting  100  tons  of  reef,  at  $18 18.00 

milling  100  tons  of  reef,  at  $1.92 192.00 

redemption,  at  $0.96 96 .  oo 

charges,  at  $0.84 84 .  oo 

pumping,  at  $0.72 72.00 

Total  expenses  for  100  tons $2,128.80 

Value  of  gold  recovered,  100  tons 3,600.00 

Profit  by  stripping $1,471 .40- 

Example  C. — Width  of  reef,  12  in.;  value,  30  dwt  per  ton. 
Stoping  reef  and  waste  together.  Average  value  of  30  in.,  12 
dwt;  40  per  cent  of  this  is  reef;  60  per  cent  is  waste;  5  per  cent 
is  sorted,  equal  to  3  per  cent  of  the  waste;  leaving  97  per  cent  to 
mill,  averaging  12.4  dwt. ;  75  per  cent  recovery  of  12.4  dwt.  is  9.3 
dwt  per  ton.  Value  of  gold  in  100  tons  (9.3  dwt.  at  $8.93)  is 
$893. 

Tons.         Cost.  Total. 

Mining  103  at  $3.60 $370.80 

Tramming   103  "      0.36 37-o8 

Hoisting    103  "      0.18 18.54 

Milling    100  "      1.44 144.00 

Pumping   100  "      0.60 60.00 

Redemption    100  "      0.72 72.00 

Charges   100  "     0.66 66.00 

Total  expenses  for  100  tons $768.42 

Value  of  gold  recovered 892.80 

Profit  $124.38 

Example  D. — Stripping  12-in  reef.  Value,  30  dwt. ;  75  per  cent 
recovery,  is  22.5  dwt,  or  $21.60.  Value  of  gold  in  100  tons  at 
$21.60  is  $2,160. 

Tons.  Cost.  Total. 

Mining  waste 250  at  $2.40 $600.00 

Mining  reef 100   "  3.60 360.00 

Handling    waste 23    "  0.48 11.04 

Handling  reef 100   "  0.36 36.00 

Hoisting  waste 23    "  0.18 4.14 

Hoisting  reef 100   "  0.18 18.00 

Milling   100   "  1.92 192.00 

Pumping   '  0.72 72.00 

Redemption    '  0.96 96.00 

Charges    "  0.72 72.00 


Total  expenses  for  100  tons $1,461 . 18 

Value  of  gold  recovered 2,160.00 


Profit    $698.82 


1.34  THE  ECONOMICS  OF  MINING 

Example  E. — Width  of  reef,  12  in.;  value,  30  dwt.  per  ton. 
Stoping  reef  and  waste  together,  30  in.  wide,  and  then  sorting  20 
per  cent  of  the  rock  mined.  Value  of  rock  before  sorting,  12 
dwt.;  after  sorting,  15  dwt.;  75  per  cent  extraction  gives  11.25 
dwt.  recovery;  100  tons  at  11.25  dwt.  at  $0.96  equals  $1,080. 

Expenses. 

Mining  125  tons  at  $3.60 ~ $450.00 

Tramming  125  tons  at  $0.36 45-00 

Hoisting  125  tons  at  $0.18 22.50 

Sorting  25  tons  at  $0.96 24.00 

Milling  100  tons  at  $1.44 144.00 

Pumping  loo  tons  at  $0.60 60.00 

Redemption  100  tons  at  $0.72 72.00 

Charges  100  tons  at  $0.66 66 .  oo 

Total  expenses  for  100  tons $883 . 50 

Value  of  gold  recovered 1,080.00 

Profit    $196.50 

These  figures  reflect  the  importance  of  carefully  weigh- 
ing the  merits  of  the  two  methods  of  stoping  when  deal- 
ing with  narrow  veins.  F.  C.  ROBERTS. 
Bulawa.yo,  Rhodesia,  Oct.  27,  1903. 


GOLD  MINING  IN   RHODESIA. 

BY  F.  C.  ROBERTS. 

(December    10,    1903.) 

Introductory. — Lying  between  latitudes  16°  and  23° 
south,  and  longitudes  25°  and  30°  east,  Rhodesia,  which, 
a  few  years  ago,  was  almost  wholly  inhabited  by 
native  tribes,  can  now  boast  of  a  white  population  of  about 
ten  thousand.  The  country  derives  its  name  from  the 
great  founder,  Cecil  John  Rhodes.  In  its  physical  aspects 
Rhodesia  differs  from  most  of  the  Western  mining  States 
of  America,  in  that  few  really  high  mountain  ranges 
traverse  the  country.  The  mining  districts  embrace  nu- 
merous small  hills  which  gradually  fade  away  into  large 
areas  of,  first,  undulating  and  then  almost  flat,  plains. 
In  the  granite  belts  an  independent  type  of  scenery  is  pre- 
sented, consisting  of  wide,  slightly  undulating  plains,  dot- 
ted with  countless  small  conical  hills  (kopjes)  varying  in 
height  from  50  to  300  feet. 

In  but  one  instance  in  the  whole  of  Rhodesia  has  it 
been  found  advantageous  to  attack  the  ore-bodies  and 
veins  through  adits ;  practically  every  mine  in  the  country 
has  been  opened  up  through  shafts.  The  gold  mining  in- 
dustry at  the  present  time  is  the  only  industrial  source 
of  revenue,  and  presents  certain  aspects  difficult  to  com- 
pare with  those  existing  in  other  countries.  The  vicissi- 
tudes to  which  Rhodesia  has  been  subjected  have  been 
numerous,  unique  and  costly ;  they  have  militated  against 
the  energy  and  enterprise  which  have  been  thrown  into 
the  country,  the  progress  of  which  has  been  sadly  re- 
tarded in  consequence. 

The  internal  system  of  railways,  which  is  now  being 
extended  over  the  country,  will  bring  within  easy  access 
of  the  centers,  Bulawayo  in  Matabeleland  and  Salisbury 


136  THE  ECONOMICS  OF  MINING 

in  Mashonaland,  every  mining  district  of  importance,  and 
thereby  remove  the  hindrance  due  to  prohibitive  prices 
and  scarcity  of  wagon  transport.  An  independent  line, 
200  miles  long,  which  is  practically  the  first  lap  in'  the 
Cape  to  Cairo  railway,  from  Bulawayo  via  Victoria  Falls, 
will  tap  the  Wankie  coal-field  by  the  end  of  November. 
The  Wankie  coal  will  then  be  available  for  use  in  practi- 
cally every  mining  district  of  Rhodesia. 

Geology. — Geologically,  those  parts  of  Rhodesia  which 
have  been  at  all  explored  present  much  the  same  features 
as  other  quartz  countries.  In  two  instances,  however, 
we  are  favored  with  geological  problems  which  promise 
to  be' of  especial  interest  and  importance,  and  in  both  in- 
stances the  commercial  aspect  of  the  inquiry  will  stimulate 
scientific  investigation.  I  refer  to  an  auriferous  diorite 
in  the  one  case,  and  an  auriferous  hornblende  porphyrite  in 
the  other. 

No  geological  survey  has  yet  been  made  in  Rhodesia, 
hence  only  a  generalized  description  is  possible.  By  far 
the  greater  portion  of  the  country  consists  of  granite 
rocks,  in  wide  belts,  having  a  strike  somewhat  west  of 
north  and  east  of  south.  The  gold  belts  embrace  the  areas 
characterized  by  slates  and  schists,  varying  in  extent  from 
a  few  hundred  yards  wide  by  half  a  dozen  miles  in  length, 
to  15  miles  wide  by  30  miles  in  length.  These  metamor- 
phic  rocks  are  traversed  by  numerous  dikes,  consisting 
of  the  many  varieties  of  diorite.  In  the  valleys,  or  small 
gulches,  of  the  hill  country,  the  alluvium  is  of  very  limited 
extent,  suggesting  a  lack  of  those  extreme  climatic  con- 
ditions necessary  to  produce  rapid  erosion. 

The  quartz  veins  include  several  distinct  types ;  the  most 
common  are  the  interlaminated  veins,  which  are  found 
abundantly  in  the  foliated  rocks,  though  numerous  segre- 
gated veins  also  exist.  The  quartz  occurs  generally  in 
lenticular  bodies,  sometimes  distinctly  isolated,  but  more 
usually  in  parallel  series,  exhibiting  great  variations  in 


GOLD  MINING  IN  RHODESIA  137 

width  and  vertical  persistence.  On  the  whole,  the  veins 
are  narrow  and  their  lateral  extent  is  rather  limited. 

At  the  Ayrshire  mine  in  Mashonaland  an  auriferous 
diorite  is  under  exploitation,  but  as  yet  little  is  known  of 
the  genesis  of  this  most  interesting  occurrence.  A  large 
amount  of  work  has  been-  accomplished  laterally,  and  the 
vertical  depth  reached  is  over  600  ft.  The  irregularity 
of  the  gold  contents  of  the  dike  and  various  other  char- 
acteristics would  seem  to  support  the  lateral  secretion 
theory.1 

The  writer  has  lately  discovered  an  auriferous  horn- 
blende porphyrite.  This  rock  is  most  interesting  petro- 
graphically,  and  is  quite  uncommon  in  this  country.  It 
consists,  as  seen  under  the  microscope,  "of  large  crystals 
of  feldspar  (chiefly  plagioclase),  possibly  with  some 
orthoclase  and  smaller  calcareous  pseudomorphs  after 
hornblende,  retaining  good  crystal  outline,  imbedded 
in  a  fine-grained  feldspathic  ground-mass.  The  feld- 
spars are  somewhat  crushed  and  the  alteration  of  the 
hornblende  implies  a  certain  amount  of  water  action." 
This  body  has  recently  undergone  exploitation,  and  ap- 
pears to  predominate  in  the  moulding  of  a  small  range  of 
hills  rising  500  ft.  above  the  surrounding  country.  In 
close  proximity  to  the  porphyrite  are  the  crystalline 
schists.  A  superficial  examination  shows  considerable 
variation  in  width,  the  maximum  being  about  150  ft., 
while  the  lateral  extent  will  probably  reach  1,000  ft.  or 
more.  Enough  work  has  not  been  done  to  decipher  the 
geological  structure,  nor  can  an  intelligent  idea,  as  yet, 
be  formed  with  regard  to  the  origin  of  the  gold  content. 
Samples  taken  over  the  various  widths  exposed  give  from 
2  to  15  dwt.  per  ton,  and  although  these  results  are  not 


1The  gold-bearing  diorite  of  the  Ayrshire  mine  was  discussed 
in  this  JOURNAL,  under  date  of  July  11,  1903,  p.  44,  by  Mr.  E.  D. 
Berrington,  and,  on  October  3,  1903,  by  Mr.  J.  E.  Spurr. 


138  THE  ECONOMICS  OF  MINING 

representative,  they  indicate  an  occurrence  of  unique 
character. 

Ancient  W or kings. — An  interesting  feature  of  Rho^ 
desia  is  the  fact  that  every  auriferous  district  has  been 
largely  worked  by  an  extinct  race,  popularly  referred  to 
as  the  'ancients/  and  although  some  relics  left  by  these 
people  have  been  found  in  the  bottom  of  old  stopes  lately 
opened,  as  well  as  among  the  numerous  ruins  existing  in 
the  country,  no  satisfactory  explanation  has  been  ad- 
vanced touching  their  identity.  The  amount  of  work  ac- 
complished and  the  quantity  of  gold,  copper  and  iron  ex- 
tracted by  them  must  have  been  enormous.  While  the 
remains  of  these  workings  have  largely  aided  the  pros- 
pector during  the  modern  reopening  of  the  country,  when 
conditions  were  more  or  less  abnormal,  there  is  little  doubt 
that  their  effect  has  tended  to  hinder  the  introduction  of 
a  thorough  system  of  prospecting,  and  has  in  a  great 
measure  deflected  attention  from  the  large  areas  contain- 
ing virgin  reefs.  Several  calculations  of  the  amount  of 
gold  extracted  by  these  'ancients'  have  been  made ;  these 
estimates  are  hypothetic  and  no  accuracy  is  claimed  for 
them,  but  the  latest  reach  $300,000,000.  It  has  been  the 
custom  to  judge  the  value  of  a  mining  proposition  in 
Rhodesia  by  the  extent  of  the  'old  workings/  without  re- 
gard to  geological  considerations;  hence  many  disap- 
pointments. 

The  knowledge  displayed  by  the  'ancients'  in  determin- 
ing the  value  of  the  ore  was  indeed  marvelous.  It  is  not 
to  be  assumed  that  they  realized  width  of  vein  as  an  im- 
portant factor,  but  it  would  appear  to  have  been  a  suffi- 
cient encouragement  to  them  that  a  vein  contained,  say, 
a  minimum  value  of  10  dwt.  per  ton.  This  work  no  doubt 
extended  over  a  very  long  period,  for  wherever  the  rock 
was  not  readily  softened  by  weathering,  they  built  fires 
against  the  stope-breasts  and  then  threw  water  upon  the 
heated  rock  so  as  to  induce  fracture.  In  some  instances, 


GOLD  MINING  IN  RHODESIA  139 

where  it  is  evident  from  the  contours  that  water  was  not 
encountered,  they  worked  to  a  depth  of  no  less  than  250 
ft.  on  the  dip. 

Financial  Considerations. — The  British  South  Africa 
Company  formerly  had  the  right  to  demand  up  to  50  per 
cent  of  the  vendor's  interests,  but  this  right  was  seldom 
exercised  to  its  full  extent;  it  has  now  been  reduced  to 
30  per  cent,  and  is  generally  satisfied  by  the  transfer  of 
the  necessary  number  of  shares  in  the  new  company. 

The  modus  operandi  obtaining  in  Rhodesia,  and  adopted 
by  practically  every  financial  house  having  an  interest 
here,  includes  many  features  which,  to  those  unacquainted 
with  the  local  conditions  and  the  market  considerations, 
would  appear  to  cast  an  unnecessary  burden  of  heavy 
capitalization  upon  the  mines ;  but  there  are  explanatory 
circumstances.  A  mining  claim  in  Rhodesia  embraces 
an  area  150  ft.  along  the  strike  of  the  outcrop  or  old 
working,  by  600  ft. ;  hence  ten  claims  constitute  a  block 
1,500  ft.  by  600  ft.,  which  is.  equal  to  the  mining  claim  as 
defined  by  the  United  States  Mineral  Code.  The  other 
regulations  contained  in  the  Mineral  Ordinance  are  really 
only  modifications  of  the  United  States  laws.  What  is 
termed  the  'parent  company'  in  Rhodesia  is  a  limited 
liability  company,  with  a  capital  of  from  $150,000  to 
$5,000,000,  formed  for  the  purpose  of  acquiring  mines, 
lands,  farms,  etc.,  the  latter  being  necessary  in  order  to 
secure  timber.  At  the  present  time  the  timber  consti- 
tutes the  only  fuel  of  the  country ;  the  mining  company 
pays  a  royalty  of  $1.20  per  cord  to  the  farm-owner.  The 
number  of  claims  controlled  by  these  parent  companies 
varies  from  100,  in  small  concerns,  to  as  many  as  5,000 
in  the  larger  companies.  The  object  of  the  parent  com- 
pany is  to  carry  out  a  system  of  prospecting  and  develop- 
ment work,  with  a  view  to  placing  independent  prop- 
erties upon  the  market.  It  is  obvious  that,  in  a  country 
where  development  expenses  are  very  high,  there  must 


140  THE  ECONOMICS  OF  MINING 

be  a  limit  to  these  operations ;  for  if  an  attempt  is  made 
by  the  parent  company  to  develop  from  18  months  to 
two  years'  supply  of  ore,  upon  a  number  of  claims,  it 
becomes  impossible  to  finance  the  work ;  hence  it  is  clear 
that  the  gold-mining  company  must  assume  big  respon- 
sibilities, and  therein  lies  the  key  to  many  failures.  The 
problems  with  which  the  parent  company  is  faced  are  as 
follows : 

(a)  Capital  and  shares  involved  in  purchase  of  prop- 
erty. 

(b)  Capital  involved  in  prospecting  and  development 
work. 

(c)  Capital  involved  in  installation  of  temporary  sur- 
face equipment. 

(d)  Interest  accumulating  upon  capital  invested. 
The  chief  considerations  of  the  gold-mining  company 

are  as  follows : 

1 i )  Capital  involved  in  purchase  of  property  from  the 
parent  company. 

(2)  Capital  involved  in  development  work. 

(3)  Capital    or    shares    involved    in    commutation    of 
Chartered  Company's  rights. 

(4)  Capital  involved  in  purchase  and  erection  of  plant. 

( 5 )  Capital  or  shares  involved  in  making  provision  for 
possible  extension  of  plant. 

Assuming  a  width  of  vein  of  30  in.,  with  the  ore-bodies 
not  too  scattered,  it  becomes  necessary  to  make  provision 
for  an  expenditure  of  no  less  than  $360,000,  in  order  to 
bring  a  property  to  a  milling  stage  and  equip  it  with  a 
2O-stamp  mill,  cyanide  plant,  etc.  This  should,  under 
ordinary  circumstances,  give  18  to  20  months'  run  of 
pay-ore.  As  a  matter  of  fact,  no  mine  in  this  country 
should  commence  the  reduction  of  ore  with  less  than 
three  years'  ore  in  such  a  state  of  exposure  as  to  be  rea- 
sonably counted  upon  to  return  a  margin  over  and  above 
the  estimated  working  expenses ;  for  it  is  next  to  impos- 


GOLD  MINING  IN  RHODESIA  141 

sible  to  keep  the  development  work  as  far  ahead  of  the 
reduction  plant  as  the  constantly  fluctuating  and  ineffi- 
cient labor-supply  demands. 

Assay  Plans. — At  most  of  those  mines,  which  have 
reached  an  advanced  stage  of  development,  surface  and 
assay  plans,  as  well  as  section  and  stoping  plans,  are  kept ; 
while  the  data  embodied  in  the  plans  vary  somewhat  for 
different  mines,  the  fundamental  principles  are  adhered 
to.  The  development  assays  as  well  as  the  stope-assays 
are  taken  at  intervals  of  5  ft.,  and  plotted  weekly.  The 
pennyweights  are  shown  in  red  and  the  width  in  inches 
in  black.  All  samples  are  taken  over  the  actual  reef- 
width,  which  figures  are  adjusted  to  an  assumed  stoping- 
width  in  the  assay-book. 

In  the  opinion  of  the  writer,  the  methods  (often  used 
when  the  width  of  reef  is  under  an  assumed  stoping- 
width)  of  sampling  over  the  stoping- width,  embracing 
both  reef  and  country  matter,  are  liable  to  produce  in- 
accurate results.  It  appears  clear  that  where  the  char- 
acter, hardness  of  the  rock,  etc.,  show  a  marked  differ- 
ence, it  is  almost  impossible  to  obtain  such  a  correct  pro- 
portion of  each  section  as  to  insure  reliable  results.  These 
remarks  are  particularly  applicable  to  this  region,  where 
so  many  small  but  rich  veins  occur,  which,  in  many  cases, 
have  lent  themselves  more  readily  to  oxidation  than  the 
enclosing  rock.  Sectional  sampling  is  largely  practiced, 
not  only  in  development  work,  but  at  all  stope-breasts,  in 
order  to  avoid  the  handling  of  ore  which  will  not  leave  a 
margin  over  mining  and  milling  expenses.  In  this  coun- 
try the  unit  of  value  is  the  troy  pennyweight,  equal  to 
about  4  shillings,  or  one  dollar.  In  order  that  immediate 
approximations  may  be  made  of  the  stope-breasts,  daily 
samples  are  taken  and  panned ;  these  furnish,  after  one 
has  become  familiar  with  the  character  of  the  gold,  etc., 
satisfactory  results ;  but  the  results  plotted  always  refer  to 
fire-assays. 


142  THE  ECONOMICS  OF  MINING 

For  the  purpose  of  avoiding  inaccuracies,  the  individual 
stopes  are  plotted  to  large  scale  upon  separate  blocks, 
and  these  are  used  for  calculating  tonnages.  The  usual 
scale  for  underground  general  plans,  etc.,  varies  from 
I  in.  =  20  ft.  to  i  in.  =  60  ft.,  depending  upon  the  extent 
of  the  property. 

Development  Work. — Generally  speaking,  the  quartz 
veins  in  this  country  may  be  said  to  be  narrow.  The 
lateral  continuity  varies  greatly,  and  rarely  exceeds  the 
full  length  of  a  block  (1,500  ft.)  ;  the  grade  (when  the 
widths  are  adjusted  to  a  common  basis  and  suitable  areas 
are  used  in  calculations)  ranges  between  8  dwt.  and  22 
dwt.  per  ton. 

At  the  Wanderer  mine,  where  a  dry-crushing  plant  of 
about  3OO-ton  capacity  has  recently  been  erected,  the 
average  is  under  5  dwt.  per  ton ;  in  this  instance  no  un- 
derground work  is  necessary,  the  ore  being  quarried.  In 
common  with  other  countries  where  the  industry  is  only 
emerging  from  infancy,  Rhodesian  ventures  have  suf- 
fered by  the  erection  of  reduction  plants  before  sufficient 
work  has  been  accomplished  underground.  The  period 
consumed  in  reaching  the  milling  stage  varies,  of  course, 
with  the  width  and  lateral  continuity  of  the  reef  in  each 
case,  but  it  may  be  said  that  in  Rhodesia  it  requires  from 
three  to  four  years  from  the  date  that  work  is  initiated. 

The  comparative  cost  of  unskilled  labor  would  suggest, 
at  first  sight,  that  the  costs  of  development  work  should 
be  very  low ;  this  is  not  the  case,  however,  for  although 
the  native  wage  seems  low,  when  the  other  expenses  in- 
cident to  their  employment  are  considered,  it  is  found 
that  they  account  for  about  30  per  cent  of  the  total  cost. 
This  is  not  clearly  reflected  in  the  figures  following, 
as  in  this  case  the  contract  system  is  largely  employed. 
The  costs  of  stores,  mining  material,  etc.,  together  with 
many  other  incidental  charges  associated  with  mining  in 
this  country,  as  well  as  administrative  expenses,  are  very 


GOLD  MINING  IN  RHODESIA  143 


Scale  of  dwts.   —  H   to  I  oz. 
"     "  inches  —  M"  to  t  foot. 


144  THE  ECONOMICS  OF  MINING 

high.    It  is  therefore  essential  that  large  footages  be  ob- 
tained, so  that  a  reasonable  distribution  may  be  made  of 
the  'constants/    An  analysis  of  the  costs  of  development 
upon  a  Rhodesian  mine  is  given  herewith : 
Mine  Development. 

Cost  Per  Ton      Percent- 
Milled,  age  of 
Total    Cost             Cents.              total  cost. 

Salaries    $1,692.28  4.44  2.47 

White  wages : 2,611.68  6.86  3.83 

Contractors    21,882.74  57-50  32.03 

Native  wages 3,176.40  8.34  4.15 

Native  food 1,080.00  2.84  1.58 

Stores   2,666.20  7.00  3.90 

Maintenance    759-50  2.00  i.n 

Workshops    1,046.86  2.74  1.53 

Native    hospital 287.14  0.74  0.42 

Native  labor  supply 74-4O  o.  18  o.  10 

Pumping    4,439.52  11.66      .        6.50 

Compound   864.08  2.26  1.27 

Compressors  and  rock-drills.  16,399.74  43-o8  '24.00 

Winding    1,605.16  4.22  2.35 

Underground    tramming....  2,731.50  7.18  3-99 

Assay    account 690.94  1.80  i.oi 

Surveying  and  sampling....  712.70  1.86  1.04 

Rock-drills  and  sharpening.  5,579.28  14.66  8.17 

Total   $68,300.12  I79-36  99-45 

The  footage  executed  during  the  period  covered  by  this 
expenditure  amounted  to  2,677,  representing  a  cost  of 
$26.50  per  foot. 

With  hand  labor,  driving  in  fairly  hard  ground,  40  ft. 
per  month  is  considered  good  work,  while  with  machine- 
drills  80  ft.  is  an  average.  On  the  Rand,  anything  up  to 
200  ft.  per  month  is  made  in  driving;  in  shaft-sinking 
also  this  rate  is  attained.  Upon  one  property  with  which 
the  writer  was  connected  in  the  Transvaal  about  six  years 
ago,  no  less  than  260  ft.  of  sinking  was  accomplished  dur- 
ing one  month,  i.  e.,  from  the  1,027- ft.  level to  the  1,287- ft. 
level. 

The  smaller  amount  of  work  accomplished  in  this  coun- 
try is  due  largely  to  the  inferior  equipment,  both  under- 
ground and  on  the  surface,  for  handling  large  quantities 
of  broken  rock. 


GOLD  MINING  IN  RHODESIA  145 

Working  Expenses. — I  believe  that,  in  Rhodesia,  the 
requirements  of  an  engineer,  in  respect  to  the  number  of 
properties  he  is  expected  to  manage,  are  unusual.  It  is 
therefore  necessary  that  detailed  and  complete  records  be 
kept.  The  comparatively  high  and  constantly  fluctuating 
prices  of  mining  materials  and  supplies  make  it  essential 
that  constant  quotations  of  these  articles  be  obtained  and 
filed  for  daily  reference,  with  the  hope  of  effecting  econ- 
omy in  operating  expenses,  as  well  as  for  the  purpose  of 
getting  out  estimates  which  can  be  treated  with  con- 
fidence. 

This  also  suggests  the  importance  of  correctly  measur- 
ing the  tonnages  handled.  The  methods  in  vogue  are  not 
conducive  to  accurate  results;  it  is  customary  to  count 
the  cars  of  certain  calculated  capacity  as  they  are  deliv- 
ered to  the  mill  or  crusher-station;  this,  less  the  number 
of  cars  discarded  as  waste  (in  all  cases  estimating  20  cu. 
ft.  of  broken  rock=i  ton),  is  taken  as  the  tonnage 
crushed.  It  is  apparent  that  greater  care  is  required  be- 
fore a  comprehensive  comparison  can  be  made  of  theoreti- 
cal and  actual  results.  The  above  methods  would  be  all 
right,  if,  after  determining  the  number  of  cubic  feet  to  the 
ton  in  individual  cases,  each  car  delivered  to  the  mill  was 
of  exactly  the  same  capacity  and  filled  to  the  same  point, 
and  moisture  samples  taken.  This,  however,  is  not  prac- 
ticable. The  stope  measurements,  in  some  cases,  are  used 
as  a  check,  but  it  is  hardly  necessary  to  state  that  only  an 
approximation  is  arrived  at.  This  matter  is  of  great  im- 
portance, both  as  regards  relative  working  costs  as  well  as 
relative  stamp-duty ;  therefore,  it  is  imperative  that  a 
uniform  system  be  adopted,  at  least  in  cases  where  the 
figures  are  to  be  filed  for  record  and  general  information. 

Scales  should  be  used  for  automatically  weighing  and 
registering  the  cars  delivered.  Then,  if  each  car  is  tared 
and  periodic  moisture-samples  are  taken  of  the  ore,  as 
delivered,  a  correct  idea  of  the  tonnage  will  be  obtained. 


146  THE  ECONOMICS  OF  MINING 

Milling. — The  introduction  of  heavy  stamps  with  the 
object  of  securing  a  large  stamp-duty  seems  to  have 
reached  its  practical  limits,  that  is,  at  1,456  Ib.  In  Africa 
the  mill  is  used  more  as  a  crushing  machine  than  with  the 
idea  of  effecting  perfect  amalgamation,  and  so  long  as  the 
ores  lend  themselves  readily  to  subsequent  treatment  by 
cyanide  in  the  state  of  fineness  produced  by  the  use  of  a 
low  discharge  and  a  coarse  screen  (20  to  25-mesh),  a  high 
duty  is  well  enough.  The  prevailing  method  of  operating 
a  stamp-mill,  in  so  far  as  the  mechanical  end  of  the  work 
is  concerned,  is  as  follows :  Order  of  drop,  1-3-5-2-4 ; 
height  of  drop,  8  in. ;  number  of  drops  per  minute,  96. 

As  a  further  means  of  increasing  the  stamp-duty, 
double  crushing  with  rock-breakers  is  resorted  to;  the 
product  being  fed  to  the  mill  is  crushed  in  the  first  case 
to  about  a  2.5-in.  ring,  and  then  passed  to  No.  2  crusher, 
where  it  is  reduced  to  about  a  i-in.  ring.  This  method 
might  be  economically  extended  to  three  courses  of  crush- 
ing before  being  fed  to  the  battery. 

That  most  important  branch  of  the  work,  namely,  sort- 
ing, is  almost  entirely  neglected  in  Rhodesian  mines,  and 
I  daresay  many  tons  of  rock  are  sent  through  the  mill 
which  would  not  pay  for  the  wear  and  tear  that  they  are 
responsible  for.  Over  a  period  of  12  months,  with  rock- 
breaking  capacity  sufficient  to  reduce  the  product  to  a 
2-in.  ring  before  entering  the  mill,  an  average  duty  of  5.5 
tons  per  stamp  per  24  hours  has  been  obtained  with  1,265- 
Ib.  stamps  (an  effective  weight  of  1,150  Ib.),  using  a  2.5- 
in.  discharge,  2O-mesh  screen,  and  the  mill  running  at  96 
eight-inch  drops  per  minute. 

It  is  well  known  that  a  stamp-mill  under  ordinary  con- 
ditions does  a  large  amount  of  unnecessary  work,  that 
is  to  say,  the  product,  when  it  has  been  reduced  to  the 
fineness  indicated  by  the  screen,  is  not  immediately  dis- 
charged; hence  a  large  percentage  of  the  ore  is  reduced 
to  a  much  finer  state  of  division  than  there  is  (from  a 


GOLD  MINING  IN  RHODESIA  147 

crushing  point  of  view)  any  necessity  for.  In  recent 
years  a  great  deal  of  attention  has  been  given  to  this  sub- 
ject, with  the  result  that  there  are  now  on  the  market  sev- 
eral classes  of  subsidiary  crushers  for  use  in  connection 
with  the  stamp-mill.  As  an  illustration  of  the  product 
furnished  from  a  stamp-battery,  it  may  be  stated  that  the 
writer  has  found,  when  using  a  lo-mesh  screen,  that  87 
per  cent  of  the  discharged  product  will  pass  through  a 
3O-mesh  screen,  and  a  duty  per  stamp  (of  1,150  Ib.)  of 
nearly  10  tons  is  obtained,  with  ordinarily  hard  quartz. 

Cyanidation. — Generally  speaking,  the  ores  of  Rho- 
desia present  few  difficulties  in  metallurgical  treatment. 
In  most  cases  the  veins  produce  a  typical  free-milling  ore ; 
at  the  mills  with  which  the  writer  is  connected  the  richest 
tailing  contains  3  dwt.  per  ton,  from  an  ore  carrying  14 
dwt.  to  16  dwt.  per  ton.  If  the  mill  were  operated  with 
a  view  to  high  plate-extraction,  and  the  tonnage  sacrificed, 
the  grade  of  tailing  would  be  even  less.  The  sand,  if 
fresh,  lends  itself  readily  to  cyanide  treatment  at  a 
low  cost  per  ton,  while,  if  highly  oxidized,  as  is  often  the 
case  when  working  in  close  proximity  to  the  ancient 
workings,  a  small  additional  cost  is  incurred  in  neutral- 
izing. 

The  construction  of  the  double-treatment  cyanide  plant 
in  use  in  this  country  presents  no  new  features,  and  em- 
braces the  usual  appliances  necessary  with  zinc  precipita- 
tion. The  time  of  treatment  varies  with  different  ores, 
according  to  the  character  of  the  gold.  In  one  instance 
the  gold  appears  to  be  coated  with  a  very  thin  film  of  iron 
sulphide  and  will  not  readily  amalgamate;,  numerous 
coarse  particles  are  contained  in  the  tailing ;  and  as  much 
as  10  to  12  days  are  required  to  obtain  a  good  extraction, 
although  the  usual  treatment  covers  three  to  four  days 
only. 

A  great  variation  is  shown  in  the  fineness  of  the  gold 
produced  from  cyanide  slime;  this  is  largely  due  to  the 


148  THE  ECONOMICS  OF  MINING 

fluxes  used,  or  the  preliminary  method  of  treatment;  it  is 
quite  possible,  and  not  expensive,  to  produce  gold  as  fine 
as  900  by  using  the  following  flux :  Gold  slime,  100  parts ; 
fused  borax,  20  to  35 ;  manganese  dioxide,  20  to  40 ;  sand, 
15  to  40  parts.  This  is  a  modification  of  what  we  called 
Crosse's  flux  at  Johannesburg.  The  exact  proportion  of 
borax,  manganese  dioxide  and  sand  is  best  determined 
by  practical  tests;  sometimes  fluorspar  (about  5  parts)  is 
used. 

The  addition  of  a  cyanide  plant  in  a  country  of  free- 
milling  ores  may  be  questioned,  but  it  is  contended  that  if 
the  grade  of  tailing  in  the  first-  case  will  pay  for  treat- 
ment, it  is  a  distinct  advantage  to  cyanide  because  of  the 
increased  capacity  of  the  mill. 

Gold  Returns. — At  the  present  time  all  declarations  of 
gold  output  from  the  several  producing  mines  are  made 
in  bullion. 

The  Mining  Ordinance  in  Rhodesia  demands  that  affi- 
davits shall  be  made  to  the  government,  covering  the 
actual  amount  of  gold  recovered  monthly,  by  the  indi- 
vidual companies,  as  well  as  by  private  enterprise.  Hence, 
after  each  clean-up  a  declaration  of  this  nature  is  made. 
The  same  form  is  requested  by  the  local  Chamber  of 
Mines,  the  latter  organization  publishing  the  returns. 
Unfortunately  the  unit  used  is  the  bullion  ounce,  which 
may  vary  from  700  to  950  fine.  It  is  obvious,  therefore, 
that  to  make  any  comparisons  without  being  in  possession 
of  the  figures  giving  the  exact  fineness  of  the  gold  is  a 
waste  of  time.  In  cyanide  gold  the  discrepancies  are  even 
greater,  the  fineness  varying  from  250  to  750.  The  elas- 
ticity attending  this  method  of  dealing  with  gold  is  very 
great,  and  could  be  utilized  for  purposes  of  much  graver 
importance  than  appears  on  the  face  of  it.  It  would  be 
far  better  to  obliterate  the  troy  measure  altogether,  sub- 
stituting shillings  and  decimals  of  shillings,  rather  than 
to  continue  the  use  of  a  method  so  devoid  of  meaning. 


GOLD  MINING  IN  RHODESIA  149 

The  monthly  production  of  gold  (or  bullion)  from 
Rhodesia  has  reached  23,570  oz.  There  are  two  or  three 
large  mills  under  construction,  which  will  add  to  the  pro- 
duction of  next  year.  With  this  increase  and  the  intro- 
duction of  a  constant  supply  of  Asiatic  labor,  the  proba- 
bilities are  that  an  output  of  40,000  oz.  will  be  reached 
within  a  year  or  so. 


MINE  LABOR  AND  COSTS  ON  THE 
WITWATERSRAND 

BY  T.  LANE  CARTER. 

(December    31,    1903.) 

The  scarcity  of  Kaffir  labor  on  the  Rand  has  made  for 
efficiency  in  its  use,  so  that  today  the  native  workers  are 
handled  more  skillfully  than  in  ante-bellum  days.  At  one 
time  too  many  Kaffirs  were  allowed  for  a  job,  whereas  now 
the  number  is  cut  to  the  lowest  point.  For  instance,  in 
1899  machine  drillmen  were  allowed  six  natives  to  run 
two  rock  drills.  Now  the  work  is  done  by  five  Kaffirs. 
The  limit  of  efficiency  with  Kaffirs  is  soon  reached  because 
of  their  refusal  to  respond  to  the  contract  system. 

The  following  figures  from  a  large  gold  mine,  of  work- 
ing costs  during  a  month  before  the  war,  and  of  a  month 
after  the  war,  are  of  interest : 

In  May,   1899.  In  June,  1903- 

Total  number  of  Kaffirs  at  work.       2,304  1,156 

Average  number  of  sick  and  idle.          462  107 

Cost  of  recruiting  a  Kaffir i.2  i6s.  4<I            £2  125.  3d. 

Average  wages  earned  per  na- 
tive per  shift £o  is.  8.7oid.  £o  is.  8.6gid. 

Average    cost    per   ton    of   ore 

broken  in  stopes  by  machines .  £o    75.  io.688d.    £o    6s.  Q.02d. 
Average   cost  by  hand   stoping 

(Kaffir  drillers) 20s.  (about)     £o  us.  i.7i2d. 

Average  number  of  tons  shov- 
eled per  native  per  shift 2,164  2,246 

Average    number    of    tons    ore 

broken  per  machine  per  shift.       8,196  8,626 

Width  of  stopes  in  inches 55  in.  55  in. 

Working  Costs,  Inclusive  of  Development  and  Head-Office 
Charges,  per  Ton  Milled. 

Mining  (including  all  develop- 
ment or  development-redemp- 
tion charges) £o  155.  7.854^.  £o  us.  i.224d. 

Surface  transportation 6.555d.  3-258d 

Sorting  and  crushing 4.954d.  2.i7id. 

Milling   2s.     7.837d.  2s.  2.475d. 

Cyaniding  2s.    g.84id.  33.  6.38od. 

General    is.    9.84id.  is.  5.63od. 

Total  cost  per  ton £i    33.     i.452d.    £o  i8s.  9.i38d. 


WITWATERSRAND  LABOR  AND  COSTS  151 

The  number  of  Kaffirs  required  to  run  present  erected 
stamps,  on  basis  of  milling  348  days  per  annum,  and 
maintaining  ore  reserves,  is  2,500. 

It  will  be  noted  that  there  is  practically  no  saving  in 
Kaffir  wages.  The  wage  has  gradually  come  up  to  what  it 
was  before  the  war. 

The  most  interesting  figures  deal  with  the  comparative 
cost  of  stoping  by  hand  power  and  machine  drills.  The 
figure  as  given  was  not  accurately  determined  for  this 
month,  and  is  therefore  approximate.  It  has  frequently 
been  maintained  that,  on  the  Rand,  ore  can  be  broken  in 
stopes  cheaper  by  hand  labor  than  by  rock  drills.  These 
data  prove  the  contrary ;  true,  the  tonnage  broken  by  hand 
power  in  June,  1903,  was  small,  and  the  cost  would  be 
less  with  a  greater  number  at  work,  but  these  figures, 
and  the  figures  of  other  mines,  prove  that  it  would  be 
uneconomical  to  substitute  hand  labor  entirely  for  ma- 
chine drills. 

In  stopes  of  5  ft.  or  more,  machines  are  preferable. 
The  proposition  is  different  when  the  reef  is,  say,  12  in. 
wide,  and  it  is  desired  to  keep  the  stoping  width  narrow. 
By  hand  drilling  a  stope  can  be  carried  20  in.  wide.  Put 
a  rock  drill  in  the  stope,  and  in  most  cases  the  width  will 
go  up  to  40  in.  With  hammers,  the  cost  of  breaking  ore 
in  the  2O-in.  stope  would  be  higher  than  in  the  4O-in. 
stope,  but  in  the  narrow  stope  the  assay  value  of  the  ore 
trammed  to  the  shaft  would  be  nearly  twice  as  high  as  in 
the  4O-in.  stope.  This  question  of  'hand  drillers  versus 
machine  drills'  in  stopes  is  a  vital  one  for  every  mine  on 
the  Rand.  Each  stope  should  be  made  a  separate  study, 
before  deciding  to  work  it  with  hammers  or  machines. 

It  will  be  seen  that  the  greatest  reduction  in  costs  has 
been  under  the  head  of  mining.  This  is  due  principally 
to  two  causes:  (i)  Cheaper  dynamite;  (2)  labor-saving 
devices  underground. 

As  regards  the  efficiency  and  cost  of  white  labor,  there 


152  THE  ECONOMICS  OF  MINING 

is  little  change.  As  far  as  development  work  ic  con- 
cerned, the  standard  is  not  as  high  as  it  was  previous  to 
the  war.  The  impression  has  gained  ground  that  in  de- 
velopment work  there  is  more  danger  from  miners' 
phthisis,  and  the  men  are,  therefore,  shy  of  the  work.  A 
stoper  can  earn  as  much  as  a  driver,  and  has  less  risks ; 
hence  the  bid  for  the  stopes.  It  may  become  necessary 
to  arrange  prices  so  that  the  man  who  drives,  raises  or 
sinks  can  earn  more  money  than  the  man  in  the  stope. 

The  employment  of  white  unskilled  labor  on  these  fields 
on  a  large  scale  is  now  practically  abandoned.  The  ex- 
periment was  a  failure.  Take  these  figures  from  a  big 
mine :  • 

Rate  per  shift  to  unskilled  white  labor,  excluding  food.  5s.  8.7i5d. 

Rate,  including  food 8s.  7 . 622d. 

Average  number  of  natives  displaced  by  one  white 
man  (for  this  mine  only,  which  is  above  the  aver- 
age)   , iM 

Total  increase  in  working  costs  and  capital  expendi- 
ture in  period  (a  few  months)  if  all  natives  had 
been  replaced  by  unskilled  white  labor £36,946 

It  is  said  that  there  are  at  present  2,000  men  out  of  em- 
ployment  on  the  Rand.  To  help  this  body  of  men,  the 
government,  which  runs  the  railroads,  is  offering  to  take 
on  unskilled  whites  at  $2  per  day. 

Quite  a  number  of  the  unskilled  whites  were  employed 
as  helpers  on  rock  drills.  After  a  few  months'  experience 
they  obtained  blasting  certificates,  and  as  far  as  the  min- 
ing regulations  are  concerned,  were  the  equals  of  men 
who  had  been  mining  for  years.  These  men  went  to  other 
mines,  showed  their  blasting  certificates,  and  were  set  at 
work  on  rock  drills.  Needless  to  say,  they  were  not  ex- 
pert. A  first-class  rock-drill  man  does  not  learn  his  trade 
in  two  months. 

Of  the  large  number  of  unemployed,  it  is  safe  to  say 
that  only  a  small  percentage  are  really  skilled  men.  The 
big  majority  are  either  without  a  trade,  or  'wasters.'  This 
is  the  crudest  place  on  earth  for  both  classes.  First-class 


WITWATERSRAND  LABOR  AND  COSTS  153 

rock-drill  men  are  hard  to  get.  Eighteen  months  ago  it 
was  made  known  in  America  and  England  that  200  skilled 
rock-drill  men  were  wanted  at  a  minimum  wage  of  £i 
per  day.  For  that  guarantee  70  or  80  men  only  have 
been  obtained.  Quite  recently,  arrangements  were  made 
to  get  out  70  Italian  miners  from  the  Simplon  tunnel. 
Some  of  these  have  already  arrived. 

It  will  be  seen  that  something  will  have  to  be  done  to 
meet  any  big  demand  for  skilled  rock-drill  men  in  the 
future.  It  is  my  opinion  that  the  outside  world  can  only 
partially  supply  the  demand.  Therefore  a  percentage  will 
have  to  be  trained  on  the  Rand.  This  has  been,  and  is  being, 
tried;  but  it  is  difficult.  As  intimated  above,  the  learner 
gets  a  blasting  certificate  in  two  months'  time,  and  passes 
as  a  skilled  driller.  He  is  a- machine  man,  possibly,  but  a 
very  inefficient  one,  expensive  to  the  company  at  any  price. 

A  possible  way  out  of  the  difficulty  would  be  to  have 
different  grades  of  certificates,  making  it  compulsory  for 
a  learner  to  serve  at  least  a  year  on  machine  drills  before 
he  is  passed  as  a  skilled  driller. 


MINING  COSTS  AT  CRIPPLE  CREEK. 

The    Editor:  (January    14,    1904.) 

SIR — Mr.  Finlay's  interesting  communication  (in  the 
JOURNAL  of  November  21)  calls  attention  to  an  important 
and  much  neglected  field  of  discussion.  If  detailed  fig- 
ures of  mining  costs  were  more  generally  available  there 
would  be  less  misdirected  effort  in  mining.  It  is  often 
assumed  that  such  figures  are  of  interest  only  to  the  min- 
ing engineer,  to  enable  him  to  check  his  own  work  against 
that  of  others.  Their  most  important  value  is,  however, 
to  the  investing  public.  If  such  figures  were  more  gen- 
erally published,  it  would  be  less  easy  for  an  unscrupu- 
lous promoter  to  impose  on  the  inexperienced;  and  there 
would  be  a  better  apportioning  of  credit  to  deserving 
mine  managers.  Probably  all  visitors  to  mining  regions 
have  been  impressed  with  the  number  of  idle  properties 
which,  on  inquiry,  are  found  to  be  idle  because  of  lack  of 
working  capital.  It  is  the  old  story  of  costs  under-esti- 
mated, of  a  scale  of  work  unsuited  to  the  character  or 
size  of  the  orebody,  and  of  waste  and  fruitless  effort. 
The  projectors  of  the  various  enterprises  have  usually 
had  utterly  erroneous  ideas  of  the  cost  of  the  work,  and 
disaster  has  been  the  result.  Again,  it  has,  unfortunately, 
happened  to  many  mining  engineers  that  their  best  efforts 
were  thwarted  by  lack  of  appreciation  of  the  significance 
of  figures  presented,  on  the  part  of  their  own  board  of 
directors.  In  the  case  cited  by  Mr.  Finlay  the  fact  that 
low  mining  costs  are  not  the  only  desiderata  is  excel- 
lently shown.  It  is  easy  on  the  other  hand  to  call  to  mind 
dividends  paid  by  reason  of  the  richness  of  the  ore-body, 
even  despite  the  absence  of  any  skill  in  actual  manage- 
ment. 

It  should  be  the  purpose  of  all  interested  in  the  mineral 
industries  to  promote  the  economical  and  efficient  devel- 
opment of  our  natural  resources,  and  certainly  the  frank 
discussion  of  costs  is  as  essential  to  this,  as  discussion  of 


MINING  COSTS  AT  CRIPPLE  CREEK      155 

methods  of  work.  However  desirable  it  may  be  to  have 
complete  cost  records,  and  I  heartily  endorse  Mr.  Finlay's 
position  in  the  matter,  it  is  not  always  practicable  to  do 
so;  and  many  engineers  hesitate  to  give  out  incomplete 
information  for  fear  of  its  being  misleading.  This  is  a 
real  danger  properly  to  be  guarded  against;  but  even 
incomplete  figures,  carefully  stated  and  analyzed,  may 
carry  their  lesson  without  promoting  misconceptions. 

These  considerations  shall  be  my  excuse  for  presenting 
the  following  partial  figures  of  the  cost  of  mining  7,087 
tons  of  average  Cripple  Creek  ore.  The  cost  per  ton  was 
$14.73,  °f  which  $9.06  was  for  labor  and  $5.67  for  supplies 
and  all  other  costs.  In  mining  the  ore  388,725  cu.  ft.  of 
stoping  was  done,  equivalent  to  54.8  cu.  ft.  per  ton  of 
ore  sold.  The  development  work  consisted  of  1,416  ft. 
of  drifting  and  100  ft.  of  sinking.  At  the  beginning  and 
end  of  the  campaign  the  ore-reserves  were  approximately 
equal,  if  not  somewhat  increased.  This  accordingly  rep- 
resents roughly  the  amount  of  development  work  neces- 
sary to  keep  the  mine  alive.  If  this  development  work 
be  figured  in  cubic  feet,  then  56,208  cu.  ft.  of  crude  ore 
and  waste  must  be  added  to  that  taken  from  the  stopes ; 
or,  for  every  ton  of  ore  sold,  54.8  cu.  ft.  was  stoped  and 
7.9  cu.  ft.  removed  in  development.  The  work  was  done 
with  small  machine  drills,  the  average  of  stoping  being 
in  the  ratio  of  120  cu.  ft.  per  machine  per  shift.  This 
ore  was  all  screened  and  hand-sorted,  so  that  the  7,087 
tons  sold  were  really  concentrated  from  the  34,759  tons 
broken  and  handled. 

If  the  costs  be  figured  on  the  basis  of  this  crude  ore 
instead  of  the  concentrated  ore,  as  is  customary  in  other 
districts,  the  cost  figures  become:  Labor  cost,  $1.84;  sup- 
plies and  general,  $1.16;  total,  $3.  Of  the  total  cost,  ap- 
proximately $2.60  was  mining  cost  and  4oc.  was  for 
development.  This  method  of  figuring  the  development 
cost  back  to  the  tons  sold  is  unusual,  but  has  advantages 


156  THE  ECONOMICS  OF  MINING 

where,  as  in  the  present  case,  it  becomes  possible.  If 
in  a  given  campaign  the  ore-reserves  were  notably  de- 
pleted or  increased,  it  would  be  difficult,  if  not  impossible. 
Even  when  the  costs  are  reduced  to  terms  of  crude  ore 
and  waste  broken,  Cripple  Creek  costs  are  high  in  com- 
parison with  those  elsewhere.  This  is  due  in  part  to 
high  labor  and  in  part  to  the  smallness  of  the  orebodies, 
which  necessitates  the  handling  of  much  waste.  In  the 
present  case  the  average  daily  wage  was  $3.57  for  an 
eight-hour  shift,  less  20  minutes  for  lunch  and  about  10 
minutes  at  changing  time.  The  figures  are  higher  than 
Mr.  Finlay's  average,  presumably  because  a  larger  pro- 
portion of  machine-men  were  employed.  Coal  also  aver- 
aged higher  than  in  the  case  cited  by  him,  though  timber 
was  about  the  same.  An  effort  was  made  to  decrease 
costs  by  increasing  the  capacity,  and  it  was  found  that 
this  decreased  the  item  of  labor,  but  not  the  supplies. 
The  record  of  two  separate  months  is  given  below : 

Labor  Supplies   and 

Tons  Sold.                                       Cost.  General    Expenses.  Total. 

1,011 $11.02                           $4.12  $15.14 

1,873 8.05                              4.99  13.04 

Not  much  reliance  is  to  be  placed  on  these  figures, 
however,  in  view  of  the  small  tonnage  and  the  consider- 
able difference  in  costs  resulting  from  variation  in  the 
amount  of  development  work  carried  on.  The  particular 
months  given  were  chosen  with  a  view  to  eliminating 
these  factors  as  far  as  possible.  Comparisons  made  be- 
tween these  figures  and  the  costs,  at  a  number  of  still 
smaller  mines  under  the  same  management,  indicate  that 
the  labor  cost  per  ton  is  not  influenced  much  by  the  scale 
of  operations  up  to  a  monthly  output  of  1,000  tons.  Com- 
parisons with  costs  at  plants  having  still  larger  outputs 
indicate  roughly  that  the  cost  per  ton  shipped  is  influ- 
enced more  by  the  character  of  the  ore-body  than  the 
scale  of  operations.  H  FoSTER  BAIN 

Washington,  D.  C,  Dec.  18,  1903. 


MINING  AND  MILLING    IN  THE  MOJAVE 
DESERT 

(January  28,    1904.) 

The  Editor: 

SIR — The  Desert  region,  from  an  economic  stand- 
point, in  regard  to  mining,  has  a  number  of  disadvantages 
that  militate  against  the  profitable  extraction  and  reduc- 
tion of  low-grade  ore,  as  compared  with  more  favored 
localities.  The  scarcity  of  water,  fuel  and  timber,  and, 
in  some  cases,  an  entire  absence  of  the  same,  increases 
the  cost  of  mining  and  reduction  to  such  an  extent  as  to 
render  the  mining  and  reduction  of  low-grade  ores  un- 
remunerative.  The  last-named  conditions  obtain  at 
Randsburg,  Kern  county,  California.  In  the  accompany- 
ing table  from  the  monthly  report  of  the  Yellow  Aster 
Mining  &  Milling  Company  it  will  be  seen  that  low-grade 
ore,  from  $3.50  up,  can  be  made  to  yield  a  good  profit, 
under  proper  conditions.  The  above-mentioned  mine  is 
equipped  with  two  mills,  one  of  100  and  the  other  of  30 
stamps,  reducing  500  tons  of  ore  a  day  on  an  average. 
Although  within  a  distance  of  two  miles  of  the  terminus 
of  the  railway,  freights  are  high,  as  will  be  seen  from  the 
prices  of  supplies,  a  few  of  the  important  ones  being  ap- 
pended herewith : 

Fuel  oil,  4^c.  per  gal. ;  lumber,  $32.50  per  thousand ; 
other  supplies  in  proportion.  Water  is  obtained  from  two 
wells,  sunk  to  the  depth  of  450  and  300  ft.,  respectively, 
at  a  mean  distance  of  six  miles  from  mine  and  mill,  at  a 
point  1,500  ft.  below  point  of  delivery.  On  account  of 
the  strike  declared  against  the  company  on  June  10,  1903, 
the  mine  remained  closed  until  September  I  following. 
Since  that  date  the  mine  has  been  in  operation  steadily  to 
its  full  capacity,  with  non-union  employees. 

The  following  is  the  scale  of  wages :   Miners,  9  hours, 


158 


THE  ECONOMICS  OF  MINING 


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MINING  IN  THE  MOJAVE  DESERT      159 

$3 ;  muckers,  9  hours,  $2.50 ;  car-men,  9  hours,  $3 ;  tim- 
ber-men, 9  hours,  $3.50;  amalgamators,  12  hours,  $4; 
stationary  engineers,  12  hours,  $4;  hoisting  engineers,  8 
hours,  $3.50;  pump-men,  12  hours,  $3.50. 

EUGENE  H.  BARTON. 
Randsburg,  Cal.,  Dec.  15,  1903. 


COST    OF    MINING    ZINC    ORE    IN    THE 
JOPLIN    DISTRICT 

The    Editor:  (February   25,    1904.) 

SIR — Your  reviews  of  the  lead  and  zinc  production  and 
the  Joplin  district  in  your  issues  of  January  7  and  14, 
and  the  discussions  in  more  recent  issues,  have  attracted 
my  attention.  The  views  expressed  as  to  the  cost  of  min- 
ing zinc  ore  in  the  Joplin  district  recall  a  problem  which 
presented  itself  to  me  about  a  year  ago. 

Naturally  enough,  it  is  popular  among  the  mine  oper- 
ators to  refer  the  cost  of  mining  to  units  of  the  product 
sold.  A  statement  like  the  following  is  very  simple  and 
easily  understood :  Zinc  ore  sells  for  $34,  the  cost  of  min- 
ing and  royalty  amounts  to  $28,  and  the  profit  is,  there- 
fore, $6  per  ton  of  zinc  ore.  This  method  of  calculation 
may  not  be  objectionable  as  applied  to  a  particular  mine 
producing  ore  of  uniform  richness,  but  it  is  readily  shown 
that  to  generalize  with  such  estimates  of  cost  may  be  very 
misleading. 

It  costs  practically  the  same  to  mine  and  mill  material 
yielding  5  per  cent  of  clean  zinc  ore  as  it  does  if  the  mine- 
run  ore  yields  10  per  cent,  but  the  operating-  cost  referred 
to  a  ton  of  product  in  the  former  case  is  about  double. 
The  royalty  charges,  on  the  other  hand,  are  a  definite  per- 
centage of  the  receipts  from  ore  sales,  and  are,  therefore, 
proportional  to  the  selling  price  and  amount  of  clean  zinc 
ore  produced.  The  determination  of  the  cost  of  produc- 
tion of  a  ton  of  zinc  ore  may  be  further  complicated  when 
a  considerable  part  of  the  product  of  the  mine  is  lead  ore. 
The  price  of  both  lead  and  zinc  ore  are  subject  to  changes 
from  week  to  week,  and  are  possibly  chargeable  also  with 
different  rates  of  royalty. 

The  table  given  herewith  was  calculated  to  meet  just 
such  a  problem  under  conditions  where  the  margin  of 
profit  was  small,  and  likely  to  be  altogether  wiped  out  by 


COST  OF  MINING  ZINC  ORE  161 


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&ifi^ 


162  THE  ECONOMICS  OF  MINING 

a  drop  of  a  few  dollars  in  the  price  of  either  lead  or  zinc 
ore.  The  mine-run  showed  a  very  uniform  yield  of  2.3 
per  cent  zinc  ore  and  i.i  per  cent  lead  ore,  calculated  from 
the  results  of  milling  12,277  tons.  Although  the  yield 
varied  fractionally  from  day  to  day,  the  average  for  any 
month  did  not  vary  more  than  o.i  per  cent  from  that 
adopted  in  the  preparation  of  the  table ;  the  figures  repre- 
sent the  calculated  net  cash  yield  per  ton  of  mine-run 
after  the  payment  of  the  royalty.  Out  of  these  amounts 
the  cost  of  mining  and  milling  is  to  be  paid. 

The  use  of  the  table  may  be  illlustrated  by  an  example : 
Assume  that  zinc  ore  is  selling  on  a  $28  basis  for  60  per 
cent  ore ;  that  the  ore  contains  some  iron,  and  must  pay  a 
penalty  of  $2  per  ton,  fetching,  therefore,  $26  per  ton  in 
the  bin;  and  that  lead  ore  sells  for  $25  per  thousand 
pounds  in  the  bin.  Under  these  conditions  a  reference 
to  the  table  shows  the  net  cash  receipts  to  be  equivalent 
to  $1.033  Per  ton>  and,  if  tne  operating  expense  is  $i  per 
ton,  the  margin  of  profit  is  3«3c.  per  ton  of  ore  mined  and 
milled.  Should  zinc  ore  prices  decline  $2  per  ton,  then 
receipts  would  fall  to  $0.992  per  ton,  and  the  mine  would 
show  a  small  loss.  Since  the  cost  of  mining  is  given  by 
our  books,  a  reference  to  this  table  affords,  at 
once,  the  data  for  an  accurate  estimate  of  prospective 
gains  or  losses  under  ruling  current  prices  for  lead  and 
zinc  ores,  and  makes  prompt  action  certain,  if  changes  in 
prices  demand  it. 

The  table  is  useful  only  for  the  particular  combination 
of  yield  and  royalty  assumed,  but  a  similar  table  may  be 
prepared  to  represent  any  other  combination  of  condi- 
tions. When  a  mine  produces  zinc  ore  alone,  or  lead  ore 
alone,  the  problem  of  determining  costs  is  simpler  and 
lends  itself  very  nicely  to  representation  by  a  diagram. 
Such  a  diagram  for  zinc  ore  is  presented  herewith. 

The  selling  price  per  ton  of  ore  is  represented  on  the 
vertical  scale  at  the  left  of  the  diagram,  the  rates  of  roy- 


COST  OF  MINING  ZINC  ORE 


163 


10 


10  15  20  25  35  10  46 

Operators  Net  Receipts  per  Ton  of  Zinc  Ore  after  Deducting  Royalties. 

COST  DIAGRAM  FOR  JOPLIN  ZINC  ORES. 


164  THE  ECONOMICS  OF  MINING 

alty  are  represented  by  one  set  of  diagonal  lines,  and  the 
rates  of  yield  of  clean  zinc  ore,  expressed  in  per  cents  of 
mine-run,  are  represented  by  another  set  of  diagonal  lines. 
The  horizontal  scale  at  the  bottom  shows  the  operators' 
net  receipts  per  ton  from  the  sale  of  the  zinc  ore,  after 
deducting  royalty,  and  the  vertical  scale  at  the  right  ex- 
presses the  operators'  net  receipts  per  ton  of  mine  run  for 
any  combination  of  prices,  royalty  and  rate  of  yield.  Out 
of  these  amounts,  the  operator  is  to  pay  his  working  costs 
and  make  his  profit.  The  use  of  the  diagram  is  explained 
by  two  examples,  one  wherein  the  net  receipts  per  ton  of 
mine-run  are  determined  for  an  assumed  combination  of 
price,  royalty  and  yield;  and  the  other  in  which 
the  working  costs,  royalty  and  yield  being  assumed, 
the  selling  price  is  determined  at  which  costs  and  receipts 
would  just  balance.  If  the  mine  yields  both  lead  and 
zinc,  the  net  receipts  per  ton  of  mine-run  may  be  deter- 
mined for  each  separately,  preferably  for  convenience,  by 
different  diagrams,  the  sum  of  the  two  being  the  total 
receipts  per  ton.  Values  for  lead  ores  may  be  shown  on 
the  same  diagram,  if  desired;  but  since  the  relative  yield 
of  lead  ores  is  often  small,  a  different  scale  for  the  yield 
diagonals  makes  a  more  convenient  and  useful  diagram. 
Another  use  of  the  diagram  is  illustrated  by  the  follow- 
ing example :  Assume  the  selling  price  of  zinc  ore  at 
$30,  royalty  20  per  cent,  yield  5  per  cent,  operating  costs 
$i  per  ton  of  mine-run.  Take  $30  on  the  scale  of  selling 
prices  at  the  left,  and  follow  the  horizontal  line  to  the  20 
per  cent  royalty-diagonal,  then  follow  the  intersecting 
vertical  line  to  the  bottom  of  the  diagram,  on  which  we 
read  $24,  which  represents  the  operators'  net  receipts  per 
ton  of  clean  zinc  ore  sold,  after  deducting  royalties.  Now 
take  $i,  on  the  vertical  scale  at  the  right  of  the  diagram, 
follow  the  horizontal  line  to  the  5  per  cent  yield  diagonal, 
then  follow  the  intersecting  vertical  line  to  the  bottom 
line,  on  which  we  read  $20.  This  represents  the  working 


COST  OF  MINING  ZINC  ORE  165 

cost  on  clean  zinc  ore,  and  the  profit  must  be,  therefore, 
the  difference  between  $24  and  $20,  namely,  $4  per  ton 
of  zinc  ore  sold.  This  will  be  seen  to  correspond  with 
the  calculations  in  the  first  example  on  the  diagram.  As- 
suming that  100  tons  of  mine-run  are  handled  daily,  the 
product  will  be  5  tons  of  clean  zinc  ore,  and  the  profit  by 
the  first  method  is  figured  on  100  tons  of  mine-run  at  2oc., 
namely,  $20,  and  by  the  method  just  explained,  the  profit 
is  on  5  tons  of  zinc  ore  at  $4,  or  $20,  as  before. 

The  cost  of  mining  and  milling  in  the  Joplin  district 
varies  from  8oc.  to  $i  per  ton  of  mine-run.  This  figure 
does  not  include  any  charge  for  redeeming  the  capital 
spent  in  opening  up  the  mine  and  equipping  it.  When 
the  ore-bodies  are  of  considerable  size,  the  mills  of  mod- 
ern construction,  and  the  operator  has  little  or  no  pump- 
ing to  do,  these  figures  need  seldom  be  exceeded,  and  in 
some  cases  costs  may  fall  somewhat  below  the  lesser  fig- 
ure. Between  these  limits,  costs  vary  according  to 
physical  conditions,  being  high  in  hard  sheet-ground, 
where  air-drills  must  be  employed,  and  the  powder  bills 
are  large,  and  in  soft  ground,  where  the  saving  in  the 
powder  bills  is  offset  by  the  cost  of  timber.  Occasionally 
an  operator  is  fortunate  enough  to  have  soft  ore  and  a 
hard  roof,  and  under  such  conditions  the  cost  of  mining 
and  milling  has  been  quoted  as  low  as  75c.  per  ton. 

Large  areas  of  sheet-ground  are  now  known  in  the 
Carterville  Webb  City  district.  Most  mines  in  this  sheet- 
ground  vary  in  yield  of  zinc  ore  from  2.5  to  5  per  cent, 
although,  in  some  cases,  they  are  very  much  richer. 
Adopting  $i  per  ton  as  a  fair  estimate  of  the  cost  of  the 
mining  and  milling  in  this  kind  of  ground,  and  referring 
to  the  diagram,  we  get  the  prices  of  ore  at  which  the 
mines  of  different  rate  of  yield  will  come  into  profitable 
production. 

In  making  comparisons,  the  effect  of  quality  on  the  sell- 
ing price  of  zinc  ore  must  be  kept  in  mind,  for,  although 


166  THE  ECONOMICS  OF  MINING 

the  basis  price  for  60  per  cent  zinc  ore  may  be  $30  per 
ton,  one  mine  may  produce  ore  of  so  high  a  grade  that  it 
finds  ready  sale  at  $34,  whereas  another  mine  may  pro- 
duce ore  containing  mundic  and  will  fetch,  according  to 
the  assay,  one  or  more  dollars  less  than  the  basis  price. 

According  to  rate  of  royalty,  from  10  to  25  per  cent : 
Ore  yielding  5  per  cent  will  pay,  when  the  zinc  ore  sells  at  $22.20 

to  $26.70. 
Ore  yielding  4.5  per  cent  will  pay,  when  the  zinc  ore  sells  at  $24.70 

to  $29.70. 
Ore  yielding  4  per  cent  will  pay,  when  the  zinc  ore  sells  at  $27.80 

to  $3340. 
Ore  yielding  3.5  per  cent  will  pay,  when  the  zinc  ore  sells  at  $31.80 

to  38.20. 
Ore  yielding  3  per  cent  will  pay,  when  the  zinc  ore  sells  at  $37.40 

to  $44.40. 
Ore  yielding  2.5  per  cent  will  pay,  when  the  zinc  ore  sells  at  $44.50 

to  $53-001. 
Ore  yielding  2  per  cent  will  pay,  when  the  zinc  ore  sells  at  $55.00 

to  $67.00*. 

The  foregoing  data  serve  to  emphasize  the  fallacy 
which  may  develop  by  basing  costs  on  the  tonnage  of  zinc 
ore  sold.  The  richer  mines  yielding  7  to  10  per  cent  and 
upward  are  exceptions  among  the  general  run  of  Joplin 
mines,  and  those  which  are  running  on  ore  leaner  than  5 
per  cent  doubtless  constitute  the  majority.  When  ore 
prices  advance  beyond  $25,  the  4.5  per  cent  and  4  per  cent 
mines  start  up;  when  prices  go  to  $32  the  3.5  per  cent 
mines  begin  to  produce,  and  at  $37  the  3  per  cent  mines 
are  worked. 

Each  successive  class  offers  to  the  market  more  ex- 
pensive 'ore,  and  consequently  the  average  cost  of  pro- 
duction for  the  entire  district,  referred  to  the  cleaned  zinc 
ore,  seems  to  advance  nearly  in  proportion  to  the  ad- 
vancing ore  prices.  The  cost  of  mining  per  ton  of 'mine- 
run  remains,  however,  practically  unchanged,  except  for 
the  effect  of  changing  prices  of  labor  and  supplies. 

W.  SPENCER  HUTCHINSON. 
Boston,  Feb.  I,  1904. 

1  Estimated  because  beyond  the  limits  of  the  diagram. 


MINING  IN   RHODESIA 

(March   10,   1904.) 

The  Editor: 

SIR — In  your  issue  of  December  10,  1903  (Vol. 
LXXVI,  pp.  885-888),  appears  a  very  interesting  and 
timely  article  on  'Gold  Mining  in  Rhodesia/  by  Mr.  F.  C. 
Roberts.  It  has  an  especial  interest  for  me,  for  many  of 
the  data  upon  which  the  article  is  based  have  been  fur- 
nished by  a  mine  in  which  I  am  a  shareholder,  and  of 
which  the  earlier  development  was  carried  on  under  my 
direction.  Mr.  Roberts  was  for  a  short  time  the  mine 
manager,  and  later  succeeded  me  as  engineer. 

Having  spent  nearly  six  years  in  Rhodesia,  and  having 
had  exceptional  opportunities  of  studying  a  large  portion 
of  that  section  of  it  known  as  Matabeleland — and  it  is  to 
this  section  that  Mr.  Roberts  more  particularly,  though 
not  exclusively,  refers — I  would  like  the  opportunity  of 
offering  a  little  friendly  criticism  on  the  article  referred 
to.  In  my  remarks  I  shall  keep  in  mind  the  fact  that  an 
article  which  attempts  in  such  small  compass  to  treat  of 
every  feature  of  the  gold-mining  industry  in  Rhodesia 
must  necessarily  be  incomplete. 

The  first  statement  upon  which  I  would  comment  is: 
"In  but  one  instance  in  the  whole  of  Rhodesia  has  it 
been  found  advantageous  to  attack  the  orebodies  and 
veins  through  adits."  If  this  means  that  only  one  adit 
has  been  driven  in  Rhodesia  it  is  very  wide  of  the  truth. 
I  have  seen  adits  on  no  fewer  than  seven  different  prop- 
erties, and  there  are  others  in  the  country;  and  I  have 
every  reason  to  believe  that  it  will  be  found  advantageous 
to  win  the  ore  from  more  than  one  of  these. 

Physical  and  Geological  Features. — While  it  is  a  fact 
that  "few  really  high  mountain  ranges  traverse  the  coun- 
try" it  must  be  borne  in  mind  that  the  general  elevation 


168  THE  ECONOMICS  OF  MINING 

is  high,  Bulawayo  being  4,469  ft.  above  sea-level,  and  the 
summits  of  the  highest  hills  reach  an  elevation  of  nearly 
6,000  ft.  Viewed  from  the  plains  and  valleys  the  hills 
certainly  do  not  appear  high. 

I  had  not  observed  the  feature  of  "conical  hills"  in  the 
granite  belts,  though  I  have  traversed  the  country  from 
its  eastern  boundary  as  far  west  as  27°  20'  E.  long.,  and 
from  its  southern  boundary  as  far  north  as  17°  40'  S. 
lat.  The  weathering  of  the  granite  hills  in  Rhodesia  is 
the  same  as  in  other  parts  of  the  world,  the  prevailing 
types  being  either  domes  or  boulder-strewn  ridges  with 
castellated  escarpments.  The  conical  hills  (more  cor- 
rectly, pyramidal)  are  rather  characteristic  of  the  schis- 
tose areas. 

It  is  true  that  "no  geological  survey  has  yet  been  made 
in  Rhodesia"  (though  in  no  other  country  in  the  world 
is  one  more  needed),  and  the  several  so-called  'geo- 
logical' maps  of  it  which  have  been  published  have  no 
scientific  value  whatever;  but  the  "generalized  descrip- 
tion" of  the  geology  given  by  Mr.  Roberts  is  not  very 
accurate,  if  not  actually  misleading.  Enough  is  known 
of  the  subject  to  afford  a  better  account  than  has  been 
presented  by  Mr.  Roberts ;  but  of  course  it  must  be  un- 
derstood that  he  writes  as  a  miner  rather  than  as  a 
geologist. 

We  are  told  that  "By  far  the  greater  portion  of  the 
country  consists  of  granite  rocks,  in  wide  belts,  having  a 
strike  somewhat  west  of  north  and  east  of  south."  Even 
if  in  the  term  "granite  rocks"  we  include  typical  granite, 
syenite,  gneiss,  and  all  granitoid  varieties  of  rocks,  I 
think  Mr.  Roberts'  estimate  of  the  extent  of  their  occur- 
rence is  an  excessively  high  one.  I  should  say  that  very 
much  less  than  one-half  the  total  area  of  the  country  is 
granitic.  The  strike  of  these  rocks  is  not  accurately 
given,  indeed  no  general  strike  prevails.  Some  of  the 
larger  granite  belts  have  a  trend  almost  due  east-and- 


MINING  IN  RHODESIA  169 

west,  some  smaller  ones  trend  north-and-south ;  and  some 
in  fact  trend  in  almost  every  direction. 

While  it  is  true  that  "the  gold  belts  embrace  the  areas 
characterized  by  slates  and  schists,"  it  is  also  true  that 
some  of  the  gold  mines  are  well  within  the  granite  areas. 
This  is  the  case  of  a  typical  mine  described,1  the  imme- 
diate country-rock  being  granitoid,  and  it  lies  on  the 
northern  side  of  an  extensive  granite  belt,  trending  nearly 
east-and-west,  and  bounded  on  the  north  and  south  by 
hills  of  metamorphic  rocks. 

We  are  told  that  "In  the  valleys,  or  small  gulches  of 
the  hill  country,  the  alluvium  is  of  very  limited  extent, 
suggesting  a  lack  of  those  extreme  climatic  conditions 
necessary  to  produce  rapid  erosion."  But  even  if  it  were 
true — which  I  take  leave  to  doubt — that  the  alluvium  is 
so  limited,  surely  the  fact  suggests  something  else  than  that 
stated.  Do  not  the  torrential  summer  rains  account  for 
the  removal  of  the  alluvium  from  the  hill  country?  In 
the  broad  valleys  the  thickness  of  the  alluvium  is  often 
very  great,  and  every  one  who  has  visited  the  country  is 
familiar  with  the  deep  rifts  by  which  the  river-fords  are 
usually  approached. 

The  description  of  the  quartz  veins  might  have  been 
extended  by  a  reference  to  a  number  of  large  ones  which 
are  not  only  wide,  but  may  be  traced  almost  continuously 
for  several  miles.  Reference  is  made  to  the  auriferous 
diorite  of  the  Ayrshire  mine,  but,  as  you  point  out  in  a 
footnote,  this  has  been  previously  described  in  the  JOUR- 
NAL at  greater  length.  I  am  greatly  interested  in  Mr. 
Roberts'  account  of  his  discovery  of  an  auriferous  horn- 
blende porphyrite,  and  I  wonder  if  it  occurs  in  a  part  of 
the  country  which  I  visited. 

Ancient  Workings. — Some  of  those  who  have  devoted 
much  time  to  the  study  of  the  question  of  the  ancient  race, 


1  THE  ENGINEERING  AND  MINING  JOURNAL,  p.  885,  Dec.  10,  1903. 


170  THE  ECONOMICS  OF  MINING 

or  races,  who  formerly  exploited  the  Rhodesian  gold- 
fields,  will  hardly  feel  flattered  on  being  told  that  "no 
satisfactory  explanation  has  been  advanced  touching  their 
(the  ancients')  identity,"  notwithstanding  that  ethno- 
graphical investigators  have  written  volumes  on  the  sub- 
ject. But  I  am  prepared  to  go  all  the  way  with  Mr.  Rob- 
erts when  he  speaks  of  the  estimates  that  have  been  made 
of  the  gold  recovered  by  the  ancients  as  "hypothetic" — I 
think  they  are  ridiculous ;  but  I  cannot  believe  with  him 
that  10  dwt.  of  gold  per  ton  of  ore  was  the  minimum 
value  of  that  treated  by  the  ancients — I  think  'they  must 
have,  in  many  cases,  treated  ore  as  low  as,  if  not  lower 
than,  5  dwt.  of  gold  to  the  ton. 

Financial  Considerations. — We  have  here  a  brief  but 
fair  account  of  the  financing  of  Rhodesian  mines,  many 
of  which,  it  may  be  emphasized,  are  very  largely  over- 
capitalized. In  referring  to  the  Mineral  Ordinance,  Mr. 
Roberts  omitted  to  mention  that  a  new  'one  has  been 
drawn  up  and  is  expected  soon  to  be  promulgated,  and 
from  which  the  objectionable  feature  of  the  'law  of  the 
apex*  is  to  be  eliminated.  Mr.  John  Hays  Hammond 
has  been  largely  blamed — I  know  not  with  what  truth — 
for  the  adoption  of  this  indefensible  feature  of  the  orig- 
inal ordinance.  But  as  the  new  ordinance  can  hardly  be 
made  retroactive,  it  is  likely  that  the  lawyers  may  yet 
reap  a  golden  harvest  from  the  obnoxious  law. 

Assay  Plans. — Mr.  Roberts'  description  of  these  as  in 
use  in  Rhodesia  is  correct  as  far  as  it  goes;  and  it  is 
satisfactory  to  learn  that  while  slight  differences  of 
method  of  constructing  the  plans  may  be  found  in  the 
several  mines,  "the  fundamental  principles  are  adhered 
to."  This  general  uniformity  of  principle  may  be  largely 
attributable  to  Mr.  E.  H.  Garthwaite,  the  government 
engineer,  who  has  made  a  special  study  of  sampling  and 
mine-valuation,  and  has  been  in  a  position  to  impress  his 
views  on  the  companies'  engineers.  The  assay  diagram 


MINING  IN  RHODESIA  171 

figured  by  Mr.  Roberts2  seems  to  me  to  have 
been  unfortunately  selected  and  inaccurately  described. 
I  do  not  think  the  use  of  graphic  diagrams  has  yet  be- 
come general  in  Rhodesia;  nor  is  the  one  illustrated  a 
'stoping  diagram.'  I  recognized  it  at  once  as  a  simple 
assay-plan  of  a  prospecting  level  which  was  opened  up 
under  my  direction  in  1897-98.  The  suggestion  that 
assay  values  should  be  given  in  shillings  instead  of  troy 
pennyweights  is  most  important,  and  it  is  to  be  hoped 
that  this  system  may  be  adopted  in  the  near  future. 

Development  Work. — It  is  difficult  to  offer  any  criti- 
cism of  the  figures  presented  by  Mr.  Roberts,  as  they  are 
incomplete  and  some  minor  errors  appear.  It  would 
seem  that  in  the  period  under  review  2,677  ft-  °f  devel- 
opment was  accomplished,  and  38,100  tons  of  ore  were 
won  and  milled.  Now,  if  the  shafts,  levels  and  winzes 
averaged  4  by  6  ft.  in  cross-section,  and  allowing  14  cu. 
ft.  of  quartz  to  the  ton,  there  would  only  be  4,589  tons 
obtained  from  the  footage  given.  Perhaps  the  decimal 
point  in  the  middle  column  of  figures  is  misplaced  one 
figure  to  the  left,  in  which  case  the  tons  milled  would 
figure  out  about  3,810,  and  the  total  cost  per  ton  milled 
would  be  $17.93  instead  of  $1.79,  which  would  be  ab- 
surd. What  is  probably  the  fact  is  the  omission  to  men- 
tion the  area  stoped.  But  'stopage'  is  not  'footage.'  If 
no  stoping  is  included  in  the  cost  the  price  given  per  foot, 
$26.50  (it  figures  out  $25.51),  is  excessive,  even  for 
Rhodesia.  On  the  other  hand,  if  the  total  cost  of  mining 
ore  is  only  $1.79  per  ton  the  figure  seems  too  low.  Put- 
ting the  cost  of  milling — which  is  not  given — at  one-half 
that  of  mining,  which  is  fair,  the  total  cost  per  ton  would 
only  be  $2.68,  a  figure  that  is  too  low  for  Mr.  Roberts 
or  anyone  else  to  reach  in  Rhodesia. 

Then  the  two  items  "Compressors  and  rock-drills"  and 
"Rock-drills  and  sharpening"  together  amount  to  $21,- 

3  THE  ENGINEERING  AND  MINING  JOURNAL,  p.  886,  Dec.  3,  1903. 


172  THE  ECONOMICS  OF  MINING 

979,  out  of  a  total  of  $68,300,  or  over  32  per  cent.  And 
here  I  might  say  that  this  seems  to  confirm  my  expressed 
opinion  that  at  the  mine  in  question,  owing  to  the  scarcity 
and  high  cost  of  fuel,  the  installation  of  a  compressor 
plant  was  not  advisable  until  cheaper  fuel  could  be  ob- 
tained. Possibly  some  part,  or  the  whole,  of  the  cost  of 
the  compressor  plant  is  included  in  the  item  $16,399;  if 
so,  a  portion  at  least  of  the  cost  of  all  the  other  plant 
should  be  included  as  well.  It  is  not  worth  while  to  dis- 
cuss these  figures  further  until  additional  light  is  thrown 
upon  them  by  their  author. 

Milling. — We  are  informed  that  "The  introduction  of 
heavy  stamps  with  the  object  of  securing  a  large  stamp- 
duty  has  now  reached  its  practical  limits,  that  is,  at  1,456 
Ib."  Does  not  this  weight  exceed  the  limit?  I  fear  so, 
and  the  fear  is  partly  inspired  by  what  Mr.  Roberts  says 
further  on  the  subject.  When  I  drew  up  the  first  specifi- 
cations for  the  mill  under  review  I  called  for  stamps  of 
1,050  Ib.  falling  weight,  but  later,  on  consulting  with 
some  of  the  leading  engineers  at  Johannesburg  and  Bula- 
wayo,  I  altered  the  specification  to  1,250  Ib.  But  the  mill 
was  ultimately  erected  under  Mr.  Roberts'  direction  and, 
I  presume,  according  to  his  specifications. 

Cyanidation. — Mr.  Roberts'  remarks  on  this  subject 
are  interesting  and  important.  It  may  be  questioned,  as 
he  points  out,  whether  it  is  advisable  to  instal  a  cyanide 
plant  in  Rhodesia  so  long  as  the  ore  continues  free-mill- 
ing. There  would  be  no  question  of  its  advisability  when- 
ever the  sulphide  ore  is  reached.  It  is  all  a  question  of 
testing  for  each  particular  mine. 

Perhaps  I  feel  an  exceptional  interest  in  Mr.  Roberts' 
article,  dealing  as  it  does  with  a  mine  of  which  the  first 
development  was  done  under  my  direction ;  but  it  should 
have  a  general  interest  as  well,  and  it  is  only  to  be  re- 
gretted that  it  was  not  longer  and  more  detailed. 

Shanghai,  Jan.  25,  1904.  WALLACE  BROAD. 


THE   ECONOMIC  RATIO  OF  TREATMENT 
CAPACITY  TO  ORE-RESERVES 

BY  H.  C.  HOOVER. 

(March  24,   1904.) 

Although  every  metal  mine  is  a  problem  peculiar  to  itself 
to  such  an  extent  as  to  upset  most  generalizations,  it  will 
be  not  wholly  useless  to  contemplate  certain  problems  in 
the  abstract.  In  various  forms  they  confront  every  engi- 
neer, sooner  or  later,  and  although  discussion  involves 
much  reiteration  of  elementary  principles,  yet  there  are 
so  many  mines  in  which  even  elementary  matters  of  good 
management  are  continually  disregarded  as  to  warrant 
such  repetition.  The  ensuing  discussion  applies  mostly 
to  that  great  majority  of  mines,  the  uncertainty  of  whose 
continuity  in  depth  necessitates  in  every  project  of  general 
policy  a  substantial  margin  of  security  against  the  un- 
known. Starting  with  an  assumption  of  unbroken  con- 
tinuity to  their  utmost  boundaries,  our  South  African 
friends  need  but  little  outside  of  compound-interest  tables 
upon  which  to  found  their  finance.  In  the  great  majority 
of  mines,  however,  the  result  of  development  at  their 
lowest  levels  remains  speculative  and  gives  a  zest  such  as 
an  assumed  persistence  can  never  afford. 

That  the  most  economical  and  profitable  treatment- 
capacity  is  the  maximum  capacity  which  can  be  employed, 
is  not  difficult  to  demonstrate;  that  the  maximum  must 
depend,  however,  upon  the  speed  of  development,  and  that 
development  must  be  pushed  as  fast  as  the  limitations  of 
nature  will  permit,  is  but  to  state  a  corollary.  Yet.  curious 
as  it  seems,  the  number  of  mines  which  have  been  op- 
erated upon  the  principle  that  the  mill  is  the  fixed  quan- 
tity and  the  mine  the  variable,  exceeds  the  number  con- 
ducted upon  the  reverse  plan.  The  objective  of  develop- 


174  THE  ECONOMICS  OF  MINING 

ment  in  this  preponderating  number  is  to  feed  the  mill. 
This  assertion  is  verified  by  the  fact  that  while  the  ma- 
jority of  mines  now  in  operation  are  more  than  ten  years 
old,  nevertheless  a  minor  number  have  reached  a  depth  of 
over  2,000  ft.  when  they  might,  even  in  this  comparatively 
short  period  have  attained  a  depth  of  3,000  ft.  had  they 
pursued  the  policy  of  development  under  highest  pressure 
and  the  erection  of  treatment  units  such  as  would  keep 
the  ore-extraction  close  to  such  development. 

It  will  be  granted  that  the  true  objective  of  mining  is 
to  gain  the  greatest  profit  from  a  given  body  of  ore.  The 
maximum  output  is  not  only  necessary  for  the  cheapest 
production,  but  money  locked  up  in  ore  underground  is 
idle  money,  and  the  profits  from  mining  can  be  increased 
in  no  mean  degree  by  rendering  it  liquid.  There  are, 
however,  limitations  imposed  upon  the  investment  of  large 
sums  of  money  in  equipment  to  secure  the  maximum  out- 
put, in  view  of  the  uncertainty  of  continuity  in  depth, 
which  need  to  be  considered.  In  considering  these  limi- 
tations, and  a  method  by  which  the  economic  ratio  may  be 
arrived  at,  it  will  be  necessary  to  demonstrate  the  gen- 
erally accepted  proposal  already  laid  down.  The  problem 
may  be  reduced  to  the  question  of  conducting  operations 
upon  a  given  output  as  against  a  greater  output,  because 
few  well  managed  mines  of  the  character  under  discus- 
sion are,  in  their  initial  stages,  equipped  to  their  maxi- 
mum possibilities — and  certainly  the  great  majority,  as 
shown  above,  are  not  yet  so  equipped ;  therefore,  the  prob- 
lem in  actual  practice  presents  itself  either  in  the  form  of 
increasing  the  output,  or  determining  originally  some  vol- 
ume of  output  to  be  provided  for,  as  against  some  smaller 
volume.  We  may  call  the  initial  treatment-capacity  the 
primary  equipment,  and  the  increased  plant  the  secondary 
equipment.  The  factors  in  this  problem  are : 

(i)  The  cost  of  production  as  affected  by  increased 
output. 


CAPACITY  AND  ORE-RESERVES          175 

(2)  The  redemption  of  capital  invested  in  secondary 
equipment. 

(3)  Limitations  imposed  by  the  uncertainty  of  contin- 
uity in  depth. 

(i)  The  elaboration  of  accounts  during  the  past  has 
introduced  to  the  engineer  many  complications  of  mining 
finance  which  did  not  trouble  our  forefathers.  We  now 
divide  the  various  charges  against  working  expenses  into, 
first,  those  charges  variable  with  tonnage  (such  as  devel- 
opment, haulage,  treatment,  etc.)  ;  and  second,  those 
charges,  usually  referred  to  as  'fixed/  which  depend  par- 
tially upon  the  element  of  time  as  well  as  tonnage,  and 
include,  partly  or  wholly,  pumping,  management,  amor- 
tization1 of  capital  invested,  etc.  Moreover,  there  is  a 
factor  of  no  mean  importance  arising  from  the  loss 
of  interest  through  idle  profits  locked  up  in  ore  standing 
in  the  mine ;  this  also  must  be  taken  into  account. 

From  the  standpoint  of  such  'fixed  charges'  as  depend 
partially  upon  the  element  of  time,  obviously  the  shorter 
the  period  involved  in  the  extraction  of  the  ore  the  bet- 
ter. The  introduction  of  increased  equipment  necessarily 
shortens  the  time  of  extraction,  and  the  saving  (and 
therefore  increased  profits),  which  can  be  thus  effected, 
amounts  nearly  to  the  whole  of  the  fixed  charges  over  the 
increased  tonnage.  There  are  certain  inevitable  co- 
ordinate reductions  in  working  expenses,  other  than  fixed 
charges,  as  the  result  of  a  larger  volume  of  output. 
What  these  amounts  will  aggregate,  in  increased  profits 
on  the  increased  tonnage,  depends  somewhat  on  the  pro- 
portion of  the  increased  volume  to  the  volume  previously 
treated,  but  the  total  saving  on  the  increased  tonnage 
may  be  taken  in  minimum  as  equal  to  the  fixed  charges. 
Also  the  profits  will  be  increased  by  the  interest  earnings 


1  By  'amortization'  is  meant  the  recovery   of  capital    invested 
with  accumulated  interest  thereon. 


176  THE  ECONOMICS  OF  MINING 

of  the  extra  profit  taken  out,  as  between  the  earlier  time 
it  would  have  been  put  into  service  by  the  secondary 
equipment,  and  the  later  time  it  would  be  released  by  the 
primary  equipment.  If  this  be  taken  at  a  fixed  rate,  say 
4  per  cent  compound  interest,  it  then  becomes  a  factor  of 
the  profit  per  ton  of  ore.  A  minor  addition  also  arises 
from  the  increased  interest-earning  on  the  greater  profit 
secured  by  the  increase  of  profit  arising  from  the  saving 
of  an  amount  equal  to  fixed  charges.  We  may  consoli- 
date all  these  additions  to  profit,  as  the  result  of  ex- 
panded output  (of  course  not  including  the  ordinary  profit 
on  the  ore),  into  tne  one  phrase  'increment  of  profits/ 

How  important  this  'increment  of  profits'  may  become 
will  be  seen  by  taking  a  few  examples.  On  a  low-grade 
deposit,  yielding  a  profit  of  $2  per  ton,  under  Cali- 
fornia conditions  of  fixed  charges  of,  say,  3<Dc.  per  ton, 
on  an  increased  tonnage  of  15,000  tons  per  annum,  the  in- 
crement at  the  end  of  three  years  would  amount  to  over 
$20,000.  With  a  mine  yielding  a  profit  of  $10  per  ton 
under  Western  Australian  conditions  of  a  fixed  charge  of, 
say,  75c.  per  ton,  the  increment  in  three  years  on  the 
same  increased  tonnage  would  aggregate  over  $65,000. 
The  rapidity  with  which  this  increment  of  profits  accu- 
mulates is  a  more  detailed  demonstration  of  the  advantage 
of  the  maximum  output,  and  it  is  also  a  demonstration  of 
the  necessity  for  a  maximum  speed  of  development. 

The  volume  of  these  savings  is  so  large  as  to  render 
the  question  of  justification  of  increased  capital  expen- 
diture for  their  realization  a  matter  of  easy  approach. 

(2)  Reduction  works,  and  subsidiary  plants  thereto, 
represent  large  sums  of  capital,  and  such  plants  are  either 
worn  out  or  become  valueless  through  exhaustion  of  the 
mine.  The  hypothesis  that  the  clothing  of  dead  mines  is 
valuable  was  long  since  exploded,  although  the  public 
sometimes  seems  not  to  have  heard  of  the  explosion.  In 
any  event,  the  capital  must  be  recovered  from  the  mine, 


CAPACITY  AND  ORE-RESERVES         177 

with  compound  interest,  during  the  life  of  the  mine.  The 
cost  of  installation  varies  with  the  locality,  character  of 
ore,  etc. ;  but  we  may  take  the  example  of  a  Californian 
gold  mine  on  the  one  hand,  where  equipment  to  handle 
an  output  of  15,000  tons  per  annum  would  cost,  say,  $18,- 
ooo,  and,  on  the  other  hand,  a  West  Australian  gold  mine, 
where  the  same  volume  of  ore  handled  would  involve  an 
expenditure  of  $50,000,  with  more  complex  treatment 
and  other  causes  involved.  The  Californian  plant,  with  4 
per  cent  compound  interest,  at  the  end  of  three  years, 
would  stand  in  at  about  $20,000 ;  and  the  West  Australian 
plant  at  about  $57,000. 

In  these  cases,  less  than  three  years'  accumulation  of 
the  increment  of  profits  is  required  to  amortize  the  entire 
capital  involved.  Given  an  instance  of  a  low-grade  ore 
and  a  high  construction  cost,  the  necessary  time  would 
be  longer,  but  in  a  particular  case  which  has  come  under 
my  observation,  of  very  high  profits  per  ton  of  ore  and 
moderate  installation  costs,  the  increment  of  profits  over 
1 8  months  was  sufficient  to  amortize  the  expenditure. 

(3)  At  the  time  of  proposed  equipment  the  life  of  a 
mine  of  this  class  is  an  unknown  factor.  Despite  this, 
however,  as  shown  above,  the  increment  of  profit  so  over- 
takes amortization  as  to  make  it  necessary  to  have  but 
short  life  in  sight  to  justify  the  capital  expenditure. 

A  certain  part  of  the  life  of  the  mine  is  tangibly  visible 
in  its  ore-reserves.  Unless  a  blunder  was  made  in  initial 
installation  (or  in  the  remote  case  of  a  mine  fully  devel- 
oped before  equipment ),  then  with  vigorous  development 
and  continuity  in  depth  the  ore-reserves  of  a  mine  will 
gain  on  the  treatment  capacity.  This  gain  will  eventually 
reach  a  point  where  the  visible  life  becomes  equal  to  the 
period  at  which  increment  of  profits  overtakes  amortiza- 
tion. So  long  as  the  reserves  continue  to  gain  upon  the 
treatment-plant,  additional  units  should  be  erected  until 
the  most  vigorous  development  is  no  longer  able  to  more 


178  THE  ECONOMICS  OF  MINING 

than  keep  pace  with  the  output.  Nor  will  such  a  policy 
entail  an  unusual  accumulation  of  ore-reserves ;  in  most 
cases  it  will  be  not  more  than  a  three  years'  supply.  Thus 
it  becomes  possible  to  determine  absolutely  the  volume  of 
treatment-capacity  without  any  speculation  as  to  contin- 
uity in  depth.  That  it  is  an  obligation  of  good  manage- 
ment, to  set  up  additional  treatment-units  whenever  in- 
crement of  profit  due  to  them  will  overtake  amortization, 
is  obvious. 

It  seems  clear,  then,  that  the  maximum  profit  from  any 
mine  can  only  be  obtained  by  the  most  rapid  exhaustion 
of  the  mine,  and  that  most  rapid  exhaustion  is  to  be  se- 
cured only  by  the  most  rigorous  prosecution  of  devel- 
opment and  the  maximum  equipment  which  can  be  em- 
ployed. Yet  in  the  majority  of  mines  the  caution  of 
sound  business  management,  owing  to  the  unknown  fac- 
tor of  continuity  in  depth,  imposes  limitations  upon  the 
extent  to  which  capital  should  be  invested  in  equipment, 
and  a  general  rule  for  the  determination  of  the  size  of 
equipment  might  be  framed  as  outlined  herewith : 

If  by  vigorous  development  the  visible  life  of  the  mine, 
as  shown  by  the  ore-reserves,  is  lengthened  so  as  to  exceed 
the  time  required  for  a  unit  of  treatment-capacity  to 
earn  an  amount,  through  the  increment  of  profits,  equal 
to  amortization  of  the  capital  invested  in  that  unit,  then 
the  installation  of  another  unit  becomes  not  only  justi- 
fiable, but  an  obligation  of  good  management. 

The  Economic  Limit  to  Accumulation  of  Ore-Reserves. 
— This  subject  may  appear  as  merely  a  phase  of  the  pre- 
ceding, and  a  natural  corollary  to  it.  We  have  a  limit 
beyond  which  the  increase  in  ore-reserves  justifies  an  in- 
crease in  plant-units  ;  in  other  words,  there  is  a  maximum 
reserve  which  it  is  advantageous  to  have  in  a  mine 

It  has  been  suggested  that,  given  a  deposit  of  fairly  reg- 
ular continuity  in  depth,  an  accumulation  of  ore-reserves 
to  this  excessive  extent  means  a  certain  amount  of  locked- 


CAPACITY  AND  ORE-RESERVES         179 

up  idle  profits,  and  that  this  profit  might  be  secured  with- 
out over-equipment  if  the  management  took  the  risk  of 
increasing  the  output  before  they  were  wholly  justified 
by  the  increase  in  reserves,  the  result  being  that  the 
same  maximum  output  could  be  maintained  without  the 
loss.  Aside  from  the  risk,  there  is  one  matter  of  general 
policy  in  the  conduct  of  a  mine  which  affects  the  case ;  it 
may  be  expressed  thus : 

Every  deposit  of  the  character  under  discussion  is  sure 
to  get  poorer  eventually  and  fail  at  some  point  in  depth. 
On  a  paying  mine,  failure  at  any  given  level  does  not  mean 
the  abandonment  of  the  mine  at  that  point.  To  what 
depth  the  search  for  ore  should  be  pursued  through  blank 
country  is  a  matter  of  local  judgment  based  on  the  char- 
acter of  the  deposit  and  the  conditions  which  determine 
its  discontinuance.  That  this  work  should  be  pursued 
while  the  reduction  works  are  in  operation  is  a  sine  qua 
non  of  good  management.  Not  only  does  it  cost  less 
while  other  operations  are  in  progress,  but  the  mine  is 
providing  the  expenditure  required  to  do  it,  which  the 
owners  are  not  likely  to  do  afterwards.  Mines  are  diffi- 
cult to  kill  in  proportion  to  their  greatness ;  the  more 
profitable  their  past  career  the  deeper  will  their  un- 
profitable exploration  be  carried.  A  mine  with  an  ore- 
reserve  equal  to  the  period  set  out  above  possesses  the 
sinews  for  pursuit  in  depth  for  an  equal  period ;  and  that 
period  will  probably  prove  sufficient  to  exhaust  reasonable 
hopes  and  to  prevent  the  premature  abandonment  of  pos- 
sibly valuable  property.  As  a  matter  of  policy,  then,  I  be- 
lieve that  the  maximum  provided  as  above  should  form 
also  the  minimum. 

The  economic  and  advisable  ore-reserve,  therefore,  will 
be  equal  in  volume  to  the  annual  output  multiplied  by  a 
number  of  years  just  under  that  needed  by  the  increment 
of  profits  to  equalize  the  amortization  required  to  con- 
struct increased  treatment-units. 


EQUIPMENT  AND  ORE-RESERVES.— I. 

(Editorial,    March   24,    1904.) 

We  take  particular  pleasure  in  publishing  an  article  by 
Mr.  H.  C.  Hoover  on  so  important  a  matter  as  the  eco- 
nomic ratio  between  the  capacity  of  the  reduction  works 
of  a  mine  and  the  tonnage  of  its  ore-reserves.  As  a  basis 
for  argument  Mr.  Hoover  has  assumed  the  existence  of  a 
plant,  and  proceeds  therefrom  to  discuss  the  additions 
to  it  which  are  warranted  by  an  increase  in  the  amount 
of  ore  available  for  treatment.  There  are  thus  two  prob- 
lems :  first,  what  size  of  mill  to  start  with,  and  then,  what 
additions  to  make  as  the  mine  grows. 

In  most  cases  the  plant  is  started  with  an  economic 
unit,  which  in  California  is  usually  a  4O-stamp  mill,  while 
at  Johannesburg  it  is  a  2OO-stamp  mill.  We  do  not  know 
that  this  is  reasoned  out  further  than  that  the  capacity  is 
based  roughly  upon  the  amount  of  ore  which  can  be 
opened  up  in  the  course  of  ordinary  development;  that 
is,  the  mill  is  expected  to  exhaust  the  existing  stoping 
area  about  as  fast  as  new  ore^reserves  are  opened  up,  so 
that  the  original  tonnage  available,  equivalent  to  a  two 
or  three  years'  supply,  is  maintained  until  such  time  as 
development  is  unsuccessful,  and  the  mine  begins  to  show 
exhaustion ;  then  the  reserves  in  hand  are  used  up  dur- 
ing a  further  period  of  exploratory  work.  A  mill  is  not 
erected  of  such  a  size  as  to  consume  all  the  ore  in  one 
year,  for  example,  because  the  initial  supply  generally 
represents  the  result  of  several  years'  development,  and 
to  start  out  at  such  a  gait  would  shortly  end  in  the  neces- 
sity of  shutting  down  part  of  the  plant.  In  the  West  it  is 
not  uncommon  to  base  the  mill  capacity  upon  the  amount 
of  ore  to  be  extracted  from  one  'lift,'  that  is,  the  tonnage 
stoped  between  two  successive  levels  one  hundred  feet 
apart ;  it  being  the  experience  that  to  open  up  one  lower 
level  per  annum,  while  consuming  the  reserves  of  one 


EQUIPMENT  AND  ORE-RESERVES        181 

upper  level,  represents  a  scale  of  working  which  is  com- 
fortable. However,  in  ordinary  vein  mining  all  such 
methods  indicate  an  unspoken  recognition  of  the  fact 
that  each  deeper  level  brings  the  mine  nearer  to  the  hori- 
zon of  eventual  impoverishment,  while  on  the  Rand  the 
limit  set  to  exploitation  by  the  area  of  the  claims,  affords 
a  more  definitive  termination  to  the  winning  of  ore. 

Having  a  certain  equipment  at  the  start  of  operations, 
what  addition  to  it  is  warranted  when  increased  ore-re- 
serves are  created  in  the  course  of  successful  development  ? 
That  is  Mr.  Hoover's  question,  which  he  himself  an- 
swers. It  can  be  stated  also  thus:  An  increase  in  the 
mill  is  justified  when  the  redemption  of  the  capital  in- 
volved, plus  interest  upon  it,  can  be  more  than  balanced 
by  the  saving  in  cost,  or  by  the  'increment  of  profit,'  upon 
the  additional  tonnage  taken  from  new  ore-reserves. 
The  subject  can  be  treated  by  differential  calculus,  and, 
from  a  mathematical  point  of  view,  it  might  well  serve 
as  a  thesis  for  advanced  students  at  our  schools  of  mines. 
From  the  standpoint  of  financial  experience  and  practical 
mining,  it  affords  room  for  a  discussion  which  is  well 
worthy  of  the  best  consulting  engineers  in  the  profession. 
We  commend  it  to  their  earnest  consideration. 


EQUIPMENT  AND  ORE-RESERVES— II. 

(Editorial,   April    21,    1904.) 

As  yet  there  has  been  but  little  discussion  of  the  inter- 
esting article  by  Mr.  H.  C.  Hoover  on  the  subject  of  the 
proper  ratio  of  mine  equipment  to  ore-reserves.  Mr.  E. 
G.  Spilsbury,  in  our  issue  of  March  31,  and  Mr.  B.  B. 
Lawrence,  in  this  issue,  agree  in  their  opinion  that  Amer- 
ican mining  rarely  affords  conditions  warranting  such  a 
nice  adjustment  between  the  ability  of  the  mine  to  pro- 
duce ore  and  the  capacity  of  the  mill  to  consume  it.  Ow- 
ing to  the  uncertainties  of  the  one  and  the  positiveness 
of  the  other,  it  seems,  from  their  point  of  view,  best  to 
err  on  the  safe  side  and  erect  treatment  plants  which  are 
well  under  the  probable  production.  A  manager,  of 
course,  likes  to  have  something  up  his  sleeve;  it  is  bet- 
ter from  his  standpoint  to  have  an  accumulating  ore-re- 
serve underground  than  to  hang  up  ten  or  twenty  stamps ; 
he  would  rather  have  ore  lying  broken  in  the  stopes  than 
shut  down  a  part  of  the  cyanide  plant  for  lack  of  an 
adequate  supply.  But,  as  a  matter  of  fact,  the  capacity 
of  the  initial  plant  is  usually  ahead  of  the  rate  of  develop- 
ment ;  and  as  soon  as  there  is  evidence  that  the  two  ap- 
proach each  other,  the  owners  call  for  an  increase  in  the 
reduction  works,  because  they  want  to  rush  the  output.. 
The  American  idea  is  to  secure  certain  and  immediate 
profits  at  the  expense  of  ultimate  possible  economy.  While 
the  engineers  may  appreciate  the  benefit  of  plans  which 
purpose  the  amortization  of  capital,  and  though  they  may 
be  fully  awake  to  the  economy  of  a  proper  balance  be- 
tween the  capacities  of  the  mine  and  mill,  they  are  brought 
abruptly  against  conditions  which  completely  upset  any 
logical  solution  of  the  problem.  The  owners  refuse  to 
take  a  far-sighted  view,  and  prefer  a  plan  of  operation 
which  results  in  immediate  profits;  therefore  the  man- 
ager has  to  adjust  his  point  of  view  to  theirs;  he  is  con- 


EQUIPMENT  AND  ORE-RESERVES        183 

fronted  by  a  condition,  not  a  theory,  and  adopts  a  policy 
which  is  practical,  though  short-sighted,  which  hugs  the 
brutalities  of  fact  while  it  disregards  the  attractions  of 
system;  it  is  the  inevitable  consequence  of  a  short-lived 
ownership  of  mines. 

For,  behind  all  the  arguments  for  and  against  an  en- 
larged mill-capacity  or  an  increase  in  mine  development, 
there  stands,  frank  and  unashamed,  the  essentially  Amer- 
ican idea,  that  it  is  a  poor  business  to  work  for  posterity. 
"What  has  posterity  done  for  us  ?"  the  cynic  asks.  "Let  us 
take  short  views  of  life — and  of  mining;  why  inaugurate 
a  policy  the  benefit  of  which  it  requires  years  to  work  out 
while  the  expense  of  it  burdens  the  present?"  In  this 
connection  'posterity'  means  successors  in  any  form, 
whether  they  be  shareholders,  who  five  years  hence  may 
have  acquired  the  holdings  of  the  present  proprietary,  or 
whether  it  be  the  engineering  staff — general  manager, 
mine  superintendent  and  shift  bosses — who,  likely  enough, 
will  in  the  course  of  time,  or  with  change  of  control,  suc- 
ceed the  existing  management.  Mines  get  bigger  or 
smaller;  people  make  as  much  money  by  selling  out  of 
them  as  by  buying  into  them ;  there  is  a  healthy  growth 
or  a  steady  decadence ;  in  an  intensely  active  and  pushing 
community,  such  as  an  American  metal-mining  district, 
nothing  stands  still.  In  the  coal  regions  it  is  different; 
fixity  of  ownership  is  more  prevalent  and  a  consistent 
policy  has  an  opportunity  to  justify  itself.  But  in  the 
West,  it  is  a  fact  that  the  control  of  mines  passes,  as  a 
rule,  in  less  than  five  years,  and  the  manager  is  changed 
on  an  average  .about  every  two  years,  either  because  a 
better  position  is  offered  to  him,  or  because  a  better  man 
is  found  for  the  position,  or  for  any  one  of  the  several 
reasons  which  bring  about  new  appointments  to  such 
posts  of  responsibility. 

Tangible  profit  is  the  aim  of  the  American  system,  or 
the  excuse  for  the  want  of  any  system;  sometimes  that 


184  THE  ECONOMICS  OF  MINING 

means  a  mill  with  a  capacity  per  annum  equal  to  the  total 
ore-reserves;  sometimes  it  means  no  mill  at  all,  but  the 
disposal  of  the  output  to  custom  mills  and  smelters; 
sometimes  it  means  no  mill  and  no  production,  but  merely 
a  preparation  of  the  mine  for  a  sale;  in  each  case  the 
object  in  view  is  the  making  of  the  most  money  out  of 
the  property  in  the  shortest  time.  The  method  has  the 
faults  of  its  virtues. 

While  the  foregoing  is  believed  to  represent  current 
practice  in  this  branch  of  mining  economics,  we  realize 
fully  that  there  is  a  large  number  of  well-organized  min- 
ing proprietaries  which  operate  mines  with  no  view  to 
exhausting  them  or  to  selling  them  or  the  shares  in  the 
companies  controlling  them,  and  which  therefore  adopt  a 
system  in  which  amortization  of  capital  and  other  nice 
adjustments  are  recognized  factors.  Taking  a  broad 
view  of  mining  activity,  the  description  given  above  will 
nevertheless  be  recognized,  we  believe,  by  those  who  are 
best  informed,  to  be  a  fair  statement  of  the  case,  the  dis- 
cussion of  which  presents  many  points  of  view. 

This  subject  is  of  great  practical  importance  to  the 
business  of  mining,  and  we  trust  that  some  of  our  ex- 
perienced engineers  will  use  our  columns  as  they  take  us 
into  their  confidence. 


EQUIPMENT  AND  ORE-RESERVES.— III. 

(Editorial,    May    5,    1904.) 

The  contribution  on  this  subject  by  Mr.  W.  R.  Ingalls 
will  be  read  with  interest,  for  it  is  an  able  argument  in 
favor  of  the  logical  treatment  of  the  problem.  Last  week 
we  emphasized  that  aspect  of  it  arising  from  the  short 
ownership  of  mines  in  our  Western  mining  regions ;  it  is 
a  view  of  the  subject  which  will  inevitably  become  modi- 
fied as  mining  is  put  on  a  sounder  basis,  but  that  it  is  the 
characteristic  American  standpoint  we  are  compelled  to 
confess.  The  Comstock  period  (although  accompanied 
by  manifestations  of  great  energy,  mechanical  resource- 
fulness and  the  invention  of  ingenious  machinery  to  meet 
new  conditions)  was  more  particularly  remarkable  for 
the  rapid  exhaustion  of  big  bonanzas;  and  the  wasteful- 
ness of  that  great  exploitation  affected  injuriously  the 
methods  of  an  entire  generation  of  mining  men  west  of 
the  Rocky  Mountains.  It  represented  an  American  type, 
just  as  the  conservative,  unprogressive  ways  of  Freiberg, 
for  example,  typified  European  ideas  of  working  out  a 
mine.  Both  extremes  are  wasteful  and  illogical;  as  any 
serious  consideration  of  amortization  of  capital  and  pos- 
sible increment  of  profit  will  abundantly  prove.  In  New 
York,  no  less  than  in  London,  new  ideas  are  developing ; 
the  introduction  of  business  acumen  into  the  erstwhile 
gambling  of  mining  tends  happily  to  elucidate  the  neces- 
sity for  treating  mining  undertakings  as  financial  enter- 
prises surrounded  by  conditions  involving  some  of  the 
same  logical  reasoning  as  manufacturing. 

The  time  was,  not  long  ago,  when  English  investors  in 
mines  bought  shares  in  properties  the  value  of  which  was 
based  chiefly  on  their  past  production,  and  if  by  chance 
they  got  an  annual  sixpenny  dividend,  accompanied  by 
soothing  explanations  of  future  betterment,  they  went 
home  content  with  their  venture ;  and  the  shares  would 


186  THE  ECONOMICS  OF  MINING 

stay  close  to  their  par  value  of  £i  until  eventually,  but  in- 
evitably, the  company  went  into  liquidation,  after  the 
shareholders  had  not  only  lost  their  capital,  but  had  also 
received  a  smaller  rate  of  interest  than  they  might  have 
obtained  elsewhere.  Ore-reserves,  equivalent  to  a  year's 
production,  were  spread  over  five  or  six  years'  operations, 
the  manager  and  staff  got  their  salaries,  the  directors  got 
their  fees,  and  in  the  end  the  shareholders  'held  the 
baby/  when  those  who  were  responsible  for  it  had  cleared 
out  without  apology.  To  that  era  succeeded  the  flotation 
of  rich  mines  with  large  available  reserves,  their  rapid 
depletion  accompanied  by  a  boom  in  the  shares,  the  accu- 
mulation of  fortunes  by  clever  insiders,  the  speedy  ruin 
of  those  who  bought  at  top  prices,  a  collapse,  a  moral,  and 
finally  a  resuscitation  of  the  mining  company  under  new 
management.  It  is  obvious  that  if  the  public  are  willing 
to  be  educated,  indirectly  through  the  professional  men 
whom  they  employ-,  to  realize  the  fundamental  principles 
of  finance,  they  will  object  as  much  to  the  long  life  of  a 
mine  which  means  the  swallowing  of  profits  in  general 
expenses  and  salaries,  as  they  will  protest  against  a  reck- 
less pouring  out  of  its  wealth  in  a  brief  spell  of  inflated 
returns  which  is  accompanied  by  'in  and  out"  selling  of 
shares  among  its  own  employees  and  such  total  lack  of 
economy  in  the  management  as  is  inevitable  when  mere 
rapidity  of  output  is  the  aim  of  all  operations,  without  any 
regard  for  the  future  of  the  enterprise. 

Both  methods  are  seen  to  be  destructive  of  mining  as  a 
respectable  form  of  investment;  the  right  appreciation  of 
them  will  bring  home  the  fact  that  the  magnitude  of  the 
equipment,  with  its  corollary,  the  rate  of  production,  must 
bear  some  logical  ratio  to  the  size  of  the  ore-reserves  and 
its  accompanying  factor,  the  vigor  of  development. 


MINE  EQUIPMENT  AND  ORE-RESERVES 

The  Editor:  (March  3I'  I9°4-} 

SIR — I  have  read  with  much  interest  Mr.  Hoover's 
paper  on  'The  Economic  Ratio  of  Treatment  Capacity 
to  Ore-Reserves.'  Every  member  of  the  profession  who 
has  been  long  in  practice  knows  that  this  is  one  of  the 
most  troublesome  questions  that  he  is  called  upon  to 
solve,  and  which,  leaving  out  the  small  minority  of  ex- 
ceptionally favored  mines,  is  seldom  solved  satisfactorily. 

Theoretically,  Mr.  Hoover's  deductions  may  be  per- 
fectly correct,  but  in  actual  practice  it  would  be  very 
difficult  to  attempt  to  apply  them  to  the  general  run  of 
mines,  as  operated  in  this  country. 

In  the  first  place,  from  my  own  experience  I  can  safely 
say  that  the  ore-treatment  plant,  whether  milling,  con- 
centrating, smelting,  or  other  reduction  means,  of  over 
75  per  cent  of  all  the  mines  I  have  known,  is,  from  the 
initial  erection,  well  in  excess  of  the  output  of  the  mine, 
under  all  ordinary  conditions  of  development.  Under 
such  conditions,  however,  a  property  is  perhaps  return- 
ing a  fair  profit  in  addition  to  an  amortization  fund  of 
say  5  per  cent.  At  this  rate  of  extraction,  and  with  rea- 
sonable development,  we  will  assume  that  a  two  years' 
ore-reserve  of  the  average  value  can  be  maintained. 
Now,  supposing  it  were  decided  to  follow  Mr.  Hoover's 
suggestions  as  to  the  best  method  of  obtaining  the  great- 
est profit  from  this  mine,  it  would  be  necessary  to  in- 
crease the  development  expenses  many  times  what  they 
were  before.  In  addition  to  this,  unless  the  development 
work  were  all  in  ore,  the  hoisting  plant  would  probably 
be  over-taxed,  in  getting  rid  of  the  waste  material.  All 
this  would  result  in  diminishing  the  immediate  distribu- 
tion of  profits,  if,  indeed,  it  did  not  extinguish  them  al- 
together. 

Now,  having  by  these  means  developed  a  furth^-  two 


188  THE  ECONOMICS  OF  MINING 

or  three  years'  reserve  of  ore,  and  probably  incurred  the 
dissatisfaction  of  all  the  stockholders,  it  becomes  neces- 
sary to  build  such  an  addition  to  the  treatment  plant  as 
will  be  requisite  to  take  care  of  this  increased  produc- 
tion. Profits  having  been  eaten  up  by  the  previous  extra 
development,  the  patient  stockholder  is  either  required 
to  subscribe  additional  capital  for  the  increase  of  the 
plant,  or  see  the  value  of  his  holdings  reduced  by  the 
issue  of  more  stock.  To  offset  this,  he  is  told  that  the 
increase  of  capacity  will  result  in  lowering  the  cost  of 
production.  This  is,  of  course,  a  fact ;  but  will  not  that 
saving  in  general  expenses  be  over-balanced  by  the  heavy 
charges  which  must,  in  justice,  be  made  for  the  amortiza- 
tion of  the  cost  of  ^the  increased  plant,  which  should  be 
coincident  with  the  exhaustion  of  the  two  or  three  years' 
ore-reserves,  which  alone  have  justified  its  erection? 

I  think  it  is  self-evident  that  the  stockholder  of  such  a 
property  would,  at  the  end  of  five  years,  when  the  as- 
sumed reserves  of  ore  had  been  exhausted,  be  in  a  much 
better  financial  condition  with  the  original  reduction 
works  only  than  he  would  be  at  the  end  of  three  years 
with  the  expanded  capacity  and  forced  production. 

In  nearly  forty  years'  experience  I  have  known  many 
mine  failures  due  to  a  too  great  development  of  treat- 
ment capacity,  but  never  one  due  to  preponderance  of 
mine  capacity  over  that  of  the  reduction  works. 

We  are  all  too  prone  to  discount  the  possibilities  of  a 
mine's  resources,  and  prepare  our  surface  works  to  meet 
the  requirements  of  these  possibilities ;  and  while,  theo- 
retically, the  expansion  of  the  treatment  plant  should 
keep  pace  with  the  mine  development,  it  is  generally  in 
practice  more  profitable  to  the  investor  when  the  opposite 
maintains.  K  GYBBON  SPILSBURY. 


MINE  EQUIPMENT  AND  ORE-RESERVES 

(April   21,    1904.) 

The  Editor: 

SIR — Mr.  Hoover's  paper  on  The  Economic.  Ratio  of 
Treatment  Capacity  to  Ore-Reserves'  upon  which  you 
have  invited  criticism,  has  received  my  careful  considera- 
tion. I  have  also  read  with  interest  your  editorial  upon 
the  subject  of  'Equipment  and  Ore-Reserves/ 

In  my  experience  in  precious  metal  mining  in  the 
United  States  it  is  the  exception  to  find  a  mine  which 
shows  anything  like  the  ore-reserves  necessary  to  carry 
out  any  such  plan  as  suggested  by  Mr.  Hoover.  I  might 
venture  to  say  that  there  are  very  few  mines,  unless  they 
are  for  sale  (or  fixed  up  for  a  sale)  which  have  any  sub- 
stantial ore-reserves  ahead  to  enable  one  to  think  of 
'amortization'  or  'increment  of  profits.'  These  terms, 
it  seems  to  me,  are  all  right  in  the  manufacturing  busi- 
ness, but  I  doubt  very  much  the  wisdom  of  using  them 
in  regard  to  precious  metal  mining.  Hand-to-mouth 
methods  are  the  rule,  and  we  must  unfortunately  adapt 
ourselves,  our  plans,  etc.,  to  conditions  as  they  exist. 

I  notice  that  you  are  obliged  in  a  footnote  to  explain 
to  your  readers  the  meaning  of  'amortization.'  This  in 
my  case — I  blush  to  confess  it — was  most  necessary,  as  I 
have  never  had  occasion  to  use  this  term  in  the  every-day 
business  of  mining.  Mr.  Hoover  says  that  "the  incre- 
ment of  profits  for  18  months  was  sufficient  to  amortize 
the  expenditure."  Why  not  say  'offset'  the  expenditure? 
Of  course  I  shall  bring  down  on  my  head  a  severe  criti- 
cism as  to  the  views  which  I  have  -expressed  in  regard 
to  Mr.  Hoover's  article ;  but  it  does  not  seem  to  me  clear, 
nor  does  it  appeal  to  my  common  sense,  as  applied  to 
precious  metal  mining  in  this  country. 

BENJ.  B.  LAWRENCE. 
New  York,  April  8,  1904. 


ANOTHER  ASPECT  OF  MINING  FINANCE 

(April   28,    1904.) 

The  Editor: 

SIR — Your  interesting  articles  recently  on  'Some  As- 
pects of  Mining  Finance,'  in  my  judgment,  fail  to  illustrate 
the  latest  English  development  of  the  subject.  Out  of 
the  chaos  of  mine  promoters,  finance  and  exploration 
companies  there  has  recently  appeared  entirely  another 
form  of  mining  finance  and  management.  There  are 
certain  firms,  composed  of  partners — not  companies — 
who,  for  reasons  which  will  become  apparent  later,  have 
steadily  come  forward  in  the  past  ten  years,  and  are  fast 
controlling  the  great  bulk  of  mining  enterprise.  These 
firms  have  risen  in  various  ways ;  some  at  first  originally 
merchants,  and  some  mining  engineers.  They  are  com- 
posed of  various  partners;  financial  men,  mining  en- 
gineers, mine  managers ;  in  any  event,  all  are  experienced 
mining  men,  devoting  their  entire  time  to  the  work.  The 
business  is  generally  organized  on  managerial  lines.  A 
central  exploration  company  is  usually  created  among 
their  friends,  when  any  particular  field  is  to  be  covered,  a 
portion  of  whose  capital  they  may  or  may  not  own.  The 
'firm'  manages  this  company,  in  return  for  a  portion  of 
the  profits.  This  exploration  company  searches  for  mines 
under  guidance  of  the  firm,  and  finding  them,  proceeds 
to  develop,  equip,  and  create  them  into  subsidiary  com- 
panies, which  are  in  turn  managed  or  controlled  by  the 
firm ;  sometimes  for  a  portion  of  their  profits,  sometimes 
for  direct  fees.  Whatever  the  details  of  internal  arrange- 
ment may  be,  from  the  standpoint  of  the  investor  and 
outside  engineer,  the  result  is  the  same,  and  there  are 
three  or  four  features  of  this  development  that  are  worthy 
of  note. 

I.  The  position  of  a  board  of  directors  sinks  into  the 


MINING  FINANCE  191 

background,  for  the  clients  of  the  firm  find  the  capital 
for  its  enterprises,  and  these  clients  look  on  the  firm  as 
responsible ;  ergo  the  firm  usually  fills  the  board  with  its 
own  partners,  or  men  of  its  'group/  who  will  guard 
their  responsibilities  properly  from  a  directorial  stand- 
point. Scandals  from  mismanagement  by  directors  have 
been  of  rarest  occurrence  in  these  groups,  both  because 
of  the  domination  of  the  firm,  and  from  the  personnel 
forming  the  boards. 

2.  The  administrations  of  the  mines  are  of  very  supe- 
rior order.     These  firms  usually  confine  their  operations 
to  specific   regions,   and  the   administrations   of   several 
mines  are  usually  grouped  together  under  a  staff  of  spe- 
cialists, such  as  no  single  mine  could  afford  to  employ. 
Supplies  are  bought  in  very  large  bulk,  direct  from  manu- 
facturers, and  London  expenses,  by  combined  offices,  are 
kept  at  a  very  low  figure.    The  quality  of  men  employed 
as  managers  and  engineers  in  these  groups  is  usually  of 
a   superior   order,   because,    with   a   great   staff,    invalu- 
able opportunity  for  comparative  results  arises,  and  the 
best  man  is  rapidly  brought   forward.     'Working  costs 
well  balanced  by  extraction  and  working  results'  is  the 
watchword  of  administration. 

3.  The  position  of  engineers  and   managers   in  such 
groups  is  much  better  than  that  of  those  employed  in 
single  companies,  which  are  usually  dominated  by  boards 
of  titled  nonentities,  or  worse. 

As  the  manager  or  engineer  with  these  firms  is  not 
dependent  upon  the  success  of  any  one  mine  for  his  fu- 
ture— for  'good  mines  do  not  make  good  managers' — 
under  this  form  of  administration,  the  opportunities  of 
promotion  are  much  wider,  and  constant  employment 
more  certain,  for  the  field  is  not  limited,  as  said,  to  one 
mine.  Other  larger  mines,  staff  positions,  and  ultimately 
partnership,  are  steps  directly  open  to  a  capable  man. 

4.  Firms  of  this  character  have  a  name  to  maintain, 


192  THE  ECONOMICS  OF  MINING 

for  on  their  good  name  does  their  ability  depend  to  secure 
the  vast  sums  of  money  which  they  employ,  and  they  are 
never  guilty  of  undertaking  'wrong'  ventures.  At  times 
even,  when  the  failure  of  mines  in  depth  precipitates  a 
loss,  they  have  supplied  a  new  mine  at  their  own  cost — 
not  for  charity,  but  to  keep  alive  the  necessary  confidence 
in  their  ability  and  integrity. 

The  irresponsible  promoter,  who  puts  up  a  dummy 
board  of  pompous  dignitaries  until  his  shares  are  dis- 
posed of,  is  having  great  difficulty  to  get  the  public  ear, 
and  must  disappear.  These  same  pompous  dignitaries 
are  a  sore  trial  to  the  honest  manager,  who  slaves  at  the 
mine  over  working  costs,  and  periodically  meets  their 
enquiries  why  he  does  not  increase  profits  by  raising 
the  amount  of  gold  per  ton,  instead  of  trying  to  reduce 
costs. 

A  feature  of  this  form  of  organization  which  is  making 
itself  felt  is  the  continuity  of  the  firm.  Its  senior  partners 
retire  and  younger  men  are  brought  from  administrative 
positions  in  the  field,  and  the  firm  goes  on.  Transitory 
transactions  for  immediate  profit,  at  the  risk  of  good 
name,  are  not  indulged  in,  for  the  name  must  be  sus- 
tained. The  investing  public  is  fast  recognizing  this,  and 
the  universal  preliminary  among  investors  is  a  statement 
regarding  a  mine,  that  is,  that  it  is  a  K.  G.  &  B.  mine, 
and  not  that  Admiral  Sir  Damfunny  is  chairman. 

There  is  a  marked  tendency  among  these  firms  to  ter- 
ritorialize, that  is,  to  confine  themselves  to  specific  re- 
gions. In  many  instances  they  are  interested  in  concerns 
which  they  do  not  control.  There  are  in  London  seven 
or  eight  such  firms  of  prominence,  South  Africa  fur- 
nishing the  field  for  most.  The  leading  firms  in  the  four 
principal  mining  regions  in  which  Englishmen  are  mostly 
concerned  are  mentioned  below,  with  an  approximation 
of  the  nominal  capital  and  market  value  of  the  enter- 
prises they  control  or  manage.  The  members  of  these 


MINING '  FINANCE  193 

firms  are  often,  as  said,  interested  in  other  concerns ;  only 
those  identified  with  the  firms  are  included : 

Region  of  Nominal  Market 

Principal  Activity.         Capital.  Value. 

Wernher,  Beit  &  Co South  Africa.    $85,500,000  $342,000,000 

Bewick,  Moreing  &  Co...    Australia.          42,100,000  70,550,000 

John  Taylor  &  Sons India,  etc.         30,500,000  65,500,000 

Tarbut,  Son  &  Jansen....  West  Africa 

and  Rhodesia.    55,500,000  25,100,000 

The  market  price  for  these  enterprises,  as  compared 
with  their  nominal  capital,  gives  food  for  thought. 

There  are  in  London,  as  set  out  in  your  articles,  sev- 
eral exploration  and  finance  companies  which  are  not 
controlled  by  such  firms.  At  one' time  they  predominated 
in  the  mining  finance  of  London.  Some  have  been  man- 
aged with  consideration  for  the  public,  and  many  not  so. 
In  all  cases,  practically,  they  are  flotation  companies  pure 
and  simple.  When  a  mine  is  floated,  so  long  as  they 
maintain  in  it  a  considerable  interest,  they  continue  to 
look  after  the  mine  and  guide  its  management,  but  as 
soon  as  the  mine  is  in  the  hands  of  the  public,  they 
promptly  forget  it  for  other  matters,  and  the  administra- 
tion goes  to  the  dogs.  Hence  the  investor  has  begun  to 
consider  somewhat,  not  only  the  character  of  investments 
offered  him,  but  also  whether  he  will  need  to  'carry  the 
baby'  all  alone  or  not. 

In  general,  in  the  finance-company  arrangement,  set 
out  so  much  in  detail  in  your  columns,  the  ultimate  ten- 
dency is  even  worse  than  with  the  individual  promoter,  for 
the  latter  has  at  least  some  moral  responsibility,  and  a 
corporation  has  none.  The  general  result  is  that  the 
'firm'  is  rapidly  becoming  the*  main  source  of  mine 
finance — and  so  much  the  better  for  the  industry.  There 
is  no  finance  company  in  London  the  ventures  of  which 
in  the  aggregate  stand  on  the  market  at  an  amount  equal 
to  their  nominal  capital — itself  a  useful  indication  of  pre- 
vious career.  OBSERVER. 

London,  April  13,  1904. 


THE   ECONOMIC  RATIO  OF  TREATMENT 
CAPACITY  TO  ORE-RESERVES 

The  Editor:  <May  s,  1904.) 

SIR — Mr.  Hoover  is  apparently  the  first  to  express  in 
the  form  of  a  scientific  generalization  a  principle  that 
has  been  well  recognized  by  engineers  as  sound  in  theory ; 
also  as  true  and  praiseworthy  in  practice,  subject  to  limi- 
tations, which  it  seems  to  me  Mr.  Hoover  clearly  referred 
to,  and  thus  disarmed  the  criticisms  of  Mr.  Spilsbury  and 
Mr.  Lawrence.  The  principle  is  briefly:  The  more 
quickly  the  values  of  a  mine  can  be  realized,  the  larger 
will  be  the  net  profit.  A  practical  limitation  of  this  prin- 
ciple is  the  uncertainty  as  to  the  ultimate  resources  of 
the  mine,  involving  hazard  in  the  provision  of  ore-treat- 
ment capacity.  Mr.  Hoover's  purpose  is  simply  to  for- 
mulate general  rules  indicating  when  there  is  no  hazard, 
but,  on  the  contrary,  the  probability  of  increased  profit 
in  the  investment  in  additional  plant.  There  is,  however, 
another  limitation  in  many  cases,  which  Mr.  Hoover  has 
not  considered,  because  I  conceive  he  has  gold  mines 
especially  in  mind :  that  is,  the  limitation  of  the  markets. 

In  opposition  to  Messrs.  Spilsbury  and  Lawrence,  I 
fail  to  see,  Mr.  Editor,  wherein  American  conditions 
differ  from  those  of  other  countries  in  so  far  as  the  ore 
deposits  are  concerned.  All  have  ore  deposits  of  various 
kinds;  some  small,  pockety  and  uncertain;  others  large, 
regular  and  persistent.  Our  American  conditions  differ 
perhaps  from  those  of  some  other  countries  in  affording 
better  public  markets  for  the  ores,  relieving  the  miner 
from  providing  any  treatment  capacity,  permitting  him 
to  sell  as  much  ore  as  he  can  extract,  and  enabling  the 
intense  operation  of  his  property,  doing  in  fact  the  very 
thing  that  Mr.  Hoover  advises;  hence  the  short  life  of 
many  of  our  mines.  There  are,  however,  many  mines  in 
America  which  require  individual  plants  of  one  kind  or 


CAPACITY  AND  ORE-RESERVES         195 

another.  That  some  of  these,  nay  even  many,  have  been 
provided  with  an  unprofitable  excess  of  treatment  capac- 
ity (of  which  we  all  know  .a  multitude  of  instances, 
and  doubtless  there  are  proportionately  as  many  in 
Australia  and  elsewhere)  does  not  disprove  the  correct- 
ness of  the  principle  that  Mr.  Hoover  formulates.  How 
can  it  be  said  that  this  is  a  principle  that  is  true  enough 
in  theory,  but  of  little  practical  application  in  a  country 
which  possesses  copper  mines  showing  the  ore-reserves 
of  Lake  Superior,  Butte,  Bingham,  and  the  various  dis- 
tricts of  Arizona ;  lead  mines  showing  the  ore-reserves 
of  the  Coeur  d'Alene,  Bonne  Terre,  Flat  River  and  Park 
City ;  zinc  mines  like  those  at  Stirling  Hill  and  Franklin 
Furnace;  and  gold  mines  like  the  Homestake  and  the 
group  on  Douglas  Island,  Alaska?  I  have  seen  mines 
which  have  had  an  excess  of  treatment  capacity ;  I  have 
also  seen  those  which  have  had  a  deficiency. 

Take  for  example  a  very  wet  mine,  producing  150,000 
tons  of  ore  per  annum,  the  cost  of  pumping  water  being 
$30,000  per  annum.  The  estimated  life  of  the  mine  is  in 
excess  of  10  years.  The  extra  cost  of  plant  to  permit 
the  production  of  300,000  tons  per  annum  would  be  $100,- 
ooo.  The  saving  in  cost  of  lifting  water  per  ton  of  ore 
would  alone  re-imburse  the  cost  of  addition  at  plant  in 
about  four  years,  at  compound  interest,  not  to  speak  of 
other  savings  that  would  ensue.  This  case  is  entirely 
analogous  to  those  which  Mr.,  Hoover  cites.  Another 
method  of  illustrating  the  idea  is  afforded  in  the  experi- 
ence in  numerous  districts  in  the  United  States  'where 
large  bodies  of  low-grade  ore  are  mined ;  a  mine  worked 
on  the  basis  of  1 ,000  tons  per  day  may  be  profitable ;  on 
the  basis  of  100  tons  per  day  not  so.  Is  not  this  prin- 
ciple entirely  in  accordance  with  the  American  idea  that 
it  is  poor  business  to  mine  for  posterity? 

I  do  not  consider  that  this  discussion  is  supposed  to 
cover  the  policy  of  the  holder  of  a  short  lease,  whose 


196  THE  ECONOMICS  OF  MINING 

interest  may  be  distinctly  to  gut  a  mine ;  or  that  of  a  for- 
tunate adventurer  who  may  find  it  most  profitable  to  pick 
the  eyes  out  of  his  mine ;  but  rather  to  the  policy  of  the 
operator,  who  has  probably  purchased  the  mine  on  ton- 
nage, assays  and  prospects,  and  has  paid  for  the  low 
as  well  as  the  high-grade  ore.  When  money  is  invested 
in  the  purchase  of  a  mine  it  has  got  to  earn  a  dividend 
commensurate  with  the  risk,  and  it  also  must  be  re- 
funded, else  there  is  no  profit.  The  more  quickly  the 
principal  can  be  refunded,  the  greater  will  be  the  profit, 
because  $10,000,000  in  value  that  can  be  realized  in  10 
years  is  worth  more  as  a  purchase  than  $10,000,000  that 
can  only  be  realized  in  40  years.  Amortization  of  the 
principal  is  therefore  a  very  important  consideration. 
Amortization,  which  is  a  term  more  used  by  British  and 
French  engineers  than  American,  is  a  very  good  word; 
there  is  no  other  single  word  which  precisely  conveys 
the  same  meaning. 

Let  us  take  the  case  of  a  mine  sold  for  $500,000,  which 
was  supposed  to  contain  at  least  3,000,000  tons  of  ore. 
The  mining  and  milling  plant  required  to  produce  1,000 
tons  of  ore  per  day  (300,000  tons  per  annum)  would 
have  cost  $300,000.  The  profit  per  annum  would  have 
been  $213,750  (71.250.  per  ton  of  ore),  which  would  have 
been  nearly  27  per  cent  on  the  investment.  Instead  of 
this,  the  mine  was  equipped  to  mill  only  one-third  as 
much  ore,  though  it  was  already  developed  to  twice  as 
much  capacity,  the  total  cost  of  development  and  equip- 
ment being  about  $160,000.  The  profit  per  annum  was 
about  $56,250  (56.25C.  per  ton),  which  was  only  10  per 
cent  on  the  investment,  or  only  sufficient  to  re-imburse 
the  latter  in  10  years,  without  interest.  By  selecting  a 
better  grade  of  ore  than  the  average,  which  the  mine 
was  opened  sufficiently  to  permit,  there  was  a  gross  profit 
of  about  $100,000  per  annum,  or  a  little  less  than  18  per 
cent,  but  this  policy  would  have  led  to  rapid  exhaustion 


CAPACITY  AND  ORE-RESERVES         197 

of  the  mine,  leaving  great  bodies  of  ore  too  low  in  grade 
to  be  mined,  with  the  prospect  of  doing  no  more  than 
returning  the  money  invested,  without  interest.  Opera- 
tion of  the  mine  on  the  basis  of  1,000  tons  per  day  prom- 
ised in  10  years  a  profit  of  $2,137,500,  which  would  have 
refunded  the  original  investment  at  the  rate  of  10  per 
cent,  with  interest  at  6  per  cent,  and  would  have  left  a 
surplus  of  $1,073,500,  or  an  average  of  nearly  13.5  per 
cent  per  annum  as  profit  on  the  investment.  Can  there 
be  any  doubt  that  this  mine,  if  originally  opened  in  a 
small  showing  of  rich  ore,  and  provided  with  small  equip- 
ment, should,  when  development  indicated  the  true  con- 
dition, have  promptly  been  provided  with  increased  fa- 
cilities ? 

Another  case  in  the  same  line  occurs  in  the  handling 
of  deposits  of  rich  ore  in  connection  with  large  deposits 
of  poor  ore.  A  certain  mine  was  producing  100  tons 
per  day  of  smelting  ore  at  a  cost  of  $2  per  ton,  of  which 
3oc.  per  ton  was  for  pumping  water  and  general  ex- 
pense— administration,  supervision,  assaying,  surveying, 
taxes,  insurance,  etc. ;  and  100  tons  per  day  of  low-grade 
ore,  which  was  concentrated  in  a  mill — cost  about  $25,- 
ooo — to  10  tons  of  product  netting  about  37-5C.  per  ton 
of  crude  ore,  the  latter  being  charged  only  with  its  di- 
rect expenses.  The  high-grade  and  low-grade  ores  were 
known  to  exist  in  the  ratio  of  1:3,  but  were  being  ex- 
tracted in  the  ratio  of  only  I  :i.  Obviously,  the  result  of 
this  policy  was  to  leave  50  per  cent  of  the  ore,  all  low 
grade,  in  the  mine  in  a  form  wherein  it  could  not  be  ex- 
tracted at  any  profit  at  all,  a  contingency  that  was  pointed 
out  by  the  engineers. 

These  examples  are  from  practice,  but  as  they  refer  to 
the  private  business  of  close  corporations,  the  details 
have  not  been  entered  into  and  the  figures  have  been 
generalized,  the  object  being  simply  to  illustrate  the  prin- 
ciple which  Mr.  Hoover  argues;  that  when  the  incre- 


198  THE  ECONOMICS  OF  MINING 

ment  of  profit  exceeds  the  cost  of  additional  plant,  ex- 
tension of  the  latter  should  be  made. 

I  have  previously  remarked  the  limitation  that  may  be 
fixed  by  market  conditions.  For  example,  if  the  entire 
market  for  a  commodity  be  supplied  by  a  single  ore  de- 
posit, no  matter  how  extensive  the  deposit  may  be  known 
to  be,  its  exploitation  is  limited  by  the  capacity  of  the 
market.  This  is  not  at  all  a  supposititious  example.  I 
fancy  this  consideration  enters  into  the  calculation  of  the 
managers  of  some  of  our  great  mines,  and  it  is  weighty, 
else  why  the  agreements  to  limit  production  that  in  one 
way  or  another,  at  one  time  or  another,  have  been  made 
in  almost  all  of  the  great  metal  industries,  gold  and  silver 
excepted?  The  Calumet  &  Hecla  mines  are  supposed  to 
have  a  further  life  of  25  years  at  their  present  rate  of 
production ;  the  other  great  copper  mines  also  have  great 
ore-reserves;  but  suppose  the  dozen  large  producers, 
who  make  approximately  50  per  cent  of  the  world's  out- 
put, should,  at  one  and  the  same  time,  enter  upon  the 
policy  of  intense  production,  the  effect  upon  the  price  of 
copper  would  immediately  be  manifest — and  the  diminu- 
tion in  value  would  probably  wipe  out  forthwith  the 
entire  increment  of  profit.  It  appears,  therefore,  that 
while  the  theory  of  intense  production  is  correct,  and  the 
results  of  practice  may  correspond,  subject  to  limitations, 
it  is  rather  fortunate  that  the  practice  is  not  generally 
followed,  again  excluding  gold  mining. 

Before  concluding  this  rather  lengthy  contribution, 
reference  may  well  be  made  to  a  new  condition  in  ore 
treatment,  which  is  developing  in  the  United  States. 
Many  years  ago  it  was  a  common  practice  to  put  reduc- 
tion works  at  the  mines.  Later,  public  works  were  estab- 
lished at  central  points  to  buy  and  treat  the  ores  from 
many  mines.  Now  it  is  again  becoming  common  for  the 
great  mines  to -have  their  own  reduction  works,  but  they 
are  being  put  at  central  points,  and  are  intended  to  buy 


CAPACITY  AND  ORE-RESERVES         199 

and  treat  the  ores  from  other  mines.  The  effect  of  this 
is  to  accomplish  all  that  Mr.  Hoover  argues  for,  and 
without  so  much  risk  to  the  individual  mine.  In  fact, 
the  ore-reduction  business  may  go  on,  and  the  works 
still  have  value  as  a  manufacturing  plant,  after  the  mine 
for  which  they  were  primarily  erected  has  been  entirely 
exhausted.  w  R  INGALLS. 

Boston,  Mass.,  April  25,  1904. 


MINING  IN   RHODESIA 

(March  24,   1904.) 

The  Editor: 

SIR — In  your  issue  of  March  10  there  appears  a  letter 
purporting  to  be  a  "friendly  criticism"  by  Mr.  Wallace 
Broad  upon  an  article  contributed  by  me  entitled  'Gold 
Mining  in  Rhodesia/  It  is  unfortunate  that  the  general 
tone  of  Mr.  Broad's  contribution  is  not  one  which  con- 
duces toward  friendly  discussion. 

In  the  main,  the  criticisms  are  so  vaguely  put  as 
scarcely  to  warrant  comment.  There  are,  however,  some 
views  rather  forcibly  expressed  by  Mr.  Broad,  which 
appear  to  me  to  be  narrow  enough  to  invite  brief  reply. 

Mr.  Broad  seems  to  be  confused  with  regard  to  the 
application  of  many  of  the  remarks  contained  in  my  arti- 
cle, in  that  he  associates  them  wholly  with  a  property  upon 
which  he  did  some  prospecting  work.  As  a  matter  of 
fact,  I  utilized  the  impressions  and  figures  obtained  from 
four  different  mining  companies  with  which  I  have  been 
professionally  connected  for  some  years.  Taking  his  par- 
agraphs seriatim: 

i.  The  Penhalongha  mine,  situated  in  Mashonaland, 
is  the  only  mine  in  southern  Rhodesia  which  it  has  been 
found  'advantageous'  to  open  with  adits  or  cross-cuts. 
Unfortunately,  to  date,  this  class  of  work  has  not  been 
wholly  confined  to  this  property.  There  are  many  mines 
in  Rhedesia,  the  early  development  of  wfiich  was  at- 
tempted through  adits;  indeed,  at  both  the  Bonsor  and 
Tebekwe  mines,  a  good  deal  of  this  class  of  work  was 
started,  but  it  was  found  later  that  vertical  or  inclined 
shafts  would  be  necessary  (by  reason  of  the  limited 
amount  of  ore  obtainable  above  the  lowest  adit  level)  ; 
so  that  under  adverse  conditions  and  at  great  expense,  in 
which  temporary  and  partial  suspension  of  milling  played 
an  important  part,  these  properties  were  permanently 
opened  through  shafts. 


MINING  IN  RHODESIA  201 

There  are  many  Rhodesian  prospects  which  contain 
adits,  but  I  know  of  no  instance  where  this  work  has 
been  of  more  than  temporary  importance.  Indeed,  I 
know  of  one  property  in  particular  where  no  less  than 
2,700  ft.  of  work  was  carried  out  on  ore  which  outcropped 
less  than  60  ft.  above  the  level  of  the  adit. 

2.  The  elevation  of  the  plateau  upon  which  Bulawayo 
is  situated,  is  as  stated,  namely,  about  4,450  ft.  above  sea- 
level,  but  the  individual  hills  and  kopjes  rarely  reach  an 
elevation  of  more  than  300  ft.  above  the  undulating  plains 
in  their  immediate  proximity. 

One  of  the  sights  of  southern  Rhodesia,  which  has  evi- 
dently escaped  Mr.  Broad,  is  the  World's  View,  a  spot 
in  the  center  of  one  of  the  large  'granite  belts,'  and  named 
by  that  empire  builder,  Cecil  John  Rhodes.  In  the  very 
midst  of  this  extensive  area,  which  has  been  described  as 
"an  undulating  plain,  embracing  a  perfect  sea  of  conical- 
shaped  kopjes,"  lies  all  that  remains  of  this  great  man. 
Similar  natural  monuments  in  a  modified  form  are  found 
in  all  the  granitic  'belts  of  Rhodesia.  In  these  belts  numer- 
ous quartz  deposits  occur,  chiefly  segregations,  but,  with 
the  possible  exception  of  one  or  two  lodes,  no  economic 
value  can  be  attached  to  these  occurrences. 

7.  As  compared  to  the  numerous  alluvial  districts  in 
which  the  writer  has  mined  on  the  Pacific  slope  of  the 
United  States,  the  deposits  of  southern  Rhodesia  are  ex- 
tremely limited,  not  alone  in  vertical  depth,  but  in  super- 
ficial area.  Having  examined  a  large  number  of  these 
occurrences  in  Rhodesia,  I  have  rarely  found  a  depth, 
including  'top  dirt,'  to  exceed  20  ft.  Although  some  of 
the  deposits  contain  fair  gold-values,  very  little  attention 
has  been  given  to  this  branch  of  mining,  for  the  reasons 
already  stated. 

One  would  hardly  expect  the  same  degree  of  erosion 
to  obtain  in  a  tropical  climate  as  in  a  climate  where  ex- 
treme cold  obtains. 


202  THE  ECONOMICS  OF  MINING 

9.  I  was  not  aware  that  any  definite  statement  had  been 
made  by  any  of  the  archaeologists  who  have  investigated 
the  ancient  ruins  of  Rhodesia,  touching  the  peoples  who 
actually  were  responsible  for  the  numerous  old  workings 
existing  in  the  country.  From  the  works  I  have  read,  I 
gathered  that  considerable  doubt  existed  upon  this  sub- 
ject. Mr.  R.  N.  Hall,  who  has  made  an  exhaustive  study 
of  the  subject  and  who  has  carried  out  some  very  im- 
portant work  lately,  at  the  Zimbabwe  ruins,  in  discussing 
the  material  which  is  to  be  embodied  in  his  new  work 
shortly  to  be  published,  informed  me,  only  last  Novem- 
ber, that  he  had  been  able  quite  recently  to  upset  many  of 
the  older  theories,  and,  in  fact,  is  making  many  alterations 
in  his  own  original  work. 

11.  If,  in  assuming  a  payable  limit  to  the  grade  of  any 
given  ore,  and  graphically  segregating  the  payable  from 
the  non-payable  ore,  as  well  as  applying  the  same  idea  to 
the  other  factor,  'width  of  vein,'  one  is  not  comprehen- 
sively  defining   the   lateral    extent    of   individual    shoots 
which  it  is  intended  to  stope,  perhaps  Mr.  Broad   will 
favor  us  with  the  more  important  considerations.     As  a 
matter  of  fact,  to  the  professional  man,  the  graphic  ex- 
pression of  values  and  widths  has  not  much  significance. 
It  has  its  importance,  however,  in  that  it  provides  a  ready 
means  of  enlightening  those  who  are  unable  to  compre- 
hend the  points  at  issue  by  reason  of  the  maze  of  figures 
and  methods  necessarily  employed  in  such  work. 

12.  Mr.  Broad  has  gone  entirely  astray  on  the  subject 
of  development  work.     In  the  first  place,  it  is  not  cus- 
tomary to  charge  the  cost  of  shafts  to  'development  work.' 
This  disbursement  is  charged  direct  to  'capital'  account. 
All  shafts  are  treated  as  assets,  and  the  moneys  expended 
thereon  are  redeemed  through  depreciation  account,  as  it 
is  presumed  that  the  shafts  will  be  of  use  just  as  long  as 
any  of  trie  surface  equipment. 

It  is  necessary  to  establish  a  basis  in  dealing  with  the  de- 


MINING  IN  RHODESIA  203 

velopment  redemption  account,  that  is,  in  redeeming  the 
moneys  expended  in  developing  the  ore  which  it  is  expected 
to  mill,  and  as  all  other  distributions  are  made  on  the  basis 
of  the  tonnage  milled,  it  is  usual  to  treat  development 
account  in  the  same  manner ;  the  cross-section  of  the  driv- 
ing or  winzing  has  absolutely  nothing  to  do  with  the  mat- 
ter, nor  is  the  small  amount  of  clean  payable  ore,  taken 
from  this  work,  of  significance;  much  less  the  total 
cubical  contents  in  waste  rock  and  ore,  which  Mr.  Broad 
has,  without  having  had  any  vein  widths,  taken  so  much 
trouble  to  compute  at  4,500  tons.  As  a  matter  of  fact,  in 
the  case  cited  it  was  found  advantageous  to  extend  the 
development  work  into  the  foot-wall  of  the  vein.  The 
calculation  was  quite  correctly  given  by  me,  and  was  ar- 
rived at  by  dividing  the  total  cost  of  development  for  a 
certain  period  by  the  number  of  tons  milled  during  the 
same  period.  The  cost  per  foot,  for  the  work,  was,  as 
explained,  above  the  average,  because  a  comparatively 
small  footage  was  obtained  during  that  particular  period ; 
but,  as  stated,  individual  months  could  have  been  chosen 
which  would  have  shown  a  great  improvement.  The 
object,  however,  was  to  show  the  distribution  of  the 
moneys  expended  upon  the  work  rather  than  to  present 
a  lot  of  flattering  figures.  Development  work,  that  is, 
drifts,  when  extended  with  machine  drills,  in  hard  rock 
and  on  a  comprehensive  scale,  seldom  costs  less  than  $20 
per  foot  in  Rhodesia.  This  of  course  includes  all  ex- 
penses not  only  at  the  mine,  but  in  London  and  at  the 
local  offices  and  engineers'  charges.  It  is  quite  clear  that 
an  excessively  small  footage,  where  a  full  staff  is  being 
employed  and  other  constants  are  evident,  reflects  un- 
favorably in  the  cost  per  foot.  Perhaps  Mr.  Broad  had  in 
mind  the  bare  contract  price,  which  in  Rhodesia  ranges 
from  $6  per  foot  in  oxidized  ground  to  $15  per  foot  in 
hard  rock.  The  facilities  offered  in  individual  cases  is 
also  an  important  factor. 


204  THE  ECONOMICS  OF  MINING 

13.  The  idea  expressed  by  Mr.  Broad  that  it  would  be 
advisable  to  exclude  the  air-compressor  from  the  equip- 
ment of  a  mine,  and  in  consequence  (by  reason  of  the  ir- 
regular supply  of  native  labor)  operate  the  mill  irregu- 
larly, as  has  been  the  experience  of  more  than  one  mine, 
cannot  be  taken  seriously.    There  is  not  one  mine  in  the 
whole  of  Rhodesia  which  has  been  able  to  run  contin- 
uously on  ore  furnished  by  hand  labor.    It  is  not  usual  to 
charge  any  part  of  the  machinery  and  plant  to  develop- 
ment account. 

14.  In  referring  to  the  weight  of  stamps  I  had  no  par- 
ticular plant  in  view.     I  have  myself  erected  three  mills 
in  Rhodesia,  using  different  weights,  namely,   1,050  lb., 
1,150  lb.,  1,258  lb. ;  while  as  far  back  as  1898  I  erected  a 
mill  in  the  Transvaal  of  1,385  lb.  stamps.     I  subjoin  the 
weights  of  the  individual  parts  of  the  heaviest  stamps'  yet 
made :  Stem,  604  lb. ;  head,  437  lb. ;  shoe,  289  lb. ;  tappet, 
135  lb. ;  total,  1,465  lb.    The  die  weighed  165  lb. 

The  evolution  of  the  mining  industry,  while  probably  not 
so  marked  in  Rhodesia  during  the  past  three  or  four 
years  as  in  other  countries,  has  brought  about  great 
changes  in  ideas,  impressions  and  methods, 

I  hope  that  Mr.  Broad,  who,  as  indicated  by  his  re- 
marks, is  a  geologist  of  high  standing,  will  favor  the 
readers  of  the  JOURNAL  with  his  impressions  of  the 
geology  of  those  parts  of  Rhodesia  in  which  he  has  spent 
so  many  years,  and  I  am  sure  that  such  an  article  from 
him  would  prove  of  great  interest  to  professional  men. 

Personally,  I  can  only  concede  a  difference  of  opinion 
upon  those  subjects  which  in  my  original  paper  were  too 
generally  stated,  or  in  Mr.  Broad's  criticism  too  vaguely, 
to  afford  ground  for  either  criticism  or  reply. 

F.  C.  ROBERTS. 


SECRET   RESERVES 

(Editorial,  May    12,   1904.) 

The  article  on  this  subject,  appearing  in  this  issue,  by  a 
writer  so  well  known  in  Australia  as  Mr.  F.  H.  Bathurst 
is  sure  to  be  read  with  interest.  Apart  from  its  local  in- 
terest, the  question  discussed  involves  many  of  the  nice 
points  of  company  management  and  the  responsibility 
which  is  inseparable  from  such  management.  When 
secrecy  of  any  sort  becomes  a  lever  opening  the  way  for 
successful  share  speculations  on  the  part  of  those  in  a 
position  of  trust  it  is  bad — unqualifiedly  bad — because  it 
means  not  only  that  investors  are  left  in  ignorance  of 
essential  facts,  but  it  involves  a  positive  danger  to  the 
morale  of  the  staff  in  control  of  operations  at  the  mine. 
A  directorate  which  practices  deception  toward  its  share- 
holders must  expect  like  treatment  from  its  manager,  and 
he  in  turn  must  not  be  surprised  if  members  of  his  staff 
pursue  similar  tactics.  "Don't  monkey  with  a  buzz-saw." 
To  play  with  a  code  of  honorable  conduct  is  to  under- 
mine the  very  basis  of  business,  and  more  particularly  is 
it  essential  that  above-board  procedure  should  be  the 
constant  aim  of  those  who  wish  to  establish  confidences 
in  the  speculative  industry  of  mining. 


SECRET  RESERVES 

BY  F.  H.  BATHURST. 

(May    12,    1904.) 

The  question  of  the  hour  in  Victoria,  Australia,  is  the 
right  of  a  mine  manager  to  keep  a  secret  reserve  of  gold 
for  the  purpose  of  averaging  the  yield.  Attention  has  been 
directed  to  the  subject  through  the  discovery  by  one  of 
the  directors  of  a  deep-lead  alluvial  mine,  that  the  man- 
ager kept  a  reserve  which  he  used  for  averaging  pur- 
poses. The  auditors,  on  seeing  the  fact  announced  in 
the  Melbourne  Argus  that  such  a  reserve  existed,  called 
on  the  mine  manager  to  produce  his  'gold-books.'  The 
manager  thereupon  forwarded  to  them  two  books :  No.  i 
showed  the  gold  sent  by  him  to  the  bank,  which  corre- 
sponded with  the  yields  as  reported  to  the  directors  and 
the  shareholders  week  by  week;  No.  2  varied  from  No.  i, 
inasmuch  as  this  book  purported  to  show  the  whole  of 
the  gold  taken  from  the  sluice-boxes  day  by  day,  and 
therefore  it  accounted  for  the  reserve  also.  This  reserve 
the  manager  had  made  up  by  taking  gold  from  the  daily 
yields  when  high,  and  storing  it  in  his  safe.  It  went 
there  without  the  knowledge  of  the  board,  who  also  were 
not  made  acquainted  with  any  withdrawals  from  it.  The 
only  check  was,  as  is  the  case  with  all  Victorian  deep- 
lead  mines,  the  sluice-man.  This  is  the  man  who  cleans 
up  the  sluice,  and  he,  with  the  manager,  weighs  the  gold 
and  initials  the  entry  of  the  amount  in  the  manager's 
gold-book,  but  he  does  not  report  to  the  directors.  The 
sluice-man  is  appointed  by  the  directors,  and  therefore 
he  is  supposed  to  be  independent  of  the  manager.  It 
may  be  added  that  the  occasion  of  the  auditors  calling 
upon  the  mine  manager  for  his  gold-book  was  that  the 
gold  in  reserve  was  not  shown  in  the  half-yearly  accounts, 
just  as  it  had  never  been  shown  in  the  weekly  yields. 

By  the  Victorian  Companies'  Act,   directors  have  to 


SECRET  RESERVES  207 

publish  a  full  statement  of  assets  and  liabilities  each  half- 
year,  and  in  addition  the  shareholders  and  the  creditors 
have  the  right  to  demand  (and  must  be  supplied  with,  on 
payment  of  a  small  fee)  three  months'  accounts  of  a  min- 
ing company.  It  is  easy  to  see  that  the  first  of  these 
obligations — that  of  presenting  a  true  statement  of  assets 
and  liabilities — cannot  be  fulfilled  if  a  vital  portion  of 
the  assets  is  kept  secret  at  the  mine.  In  the  same  way 
it  is  evident  that  if  a  shareholder,  in  the  exercise  of  his 
statutory  right,  demanded  a  complete  statement  of  ac- 
counts, he  would  not  get  it  if  the  directors  and  legal  man- 
ager did  not  include  this  gold  reserve.  The  object  of 
the  legislature  in  allowing  this  privilege  to  creditors  and 
shareholders  was  to  prevent  secrecy,  so  that  the  mining 
investor  might  be  on  the  same  footing  as  the  director  or 
any  other  officials  of  the  company.  Parliament  held  to 
the  opinion  that  it  was  necessary  for  the  well-being  of 
the  industry  that  its  affairs  should  be  open  and  above 
board  as  far  as  was  possible,  and  very  few  directors  have 
had  the  temerity  to  offer  opposition  to  its  determination 
in  that  respect. 

Now  it  is  the  practice  of  certain  directors,  after  they 
have  appointed  the  manager,  to  make  no  inquiry  whether 
he  has  a  gold  reserve.  "We  have  confidence  in  our  mine 
manager  and  we  trust  him  to  work  the  mine  to  the  best 
advantage,"  they  say.  ''If  he  thinks  it  is  desirable  to  keep 
a  gold  reserve  to  equalize  yields,  let  him  do  so.  We  do 
not  want  to  know,  and  if  we  do  not  know  we  do  not  tell 
a  lie  when  we  say  to  shareholders  that  we  are  not  aware 
if  a  reserve  is  kept."  It  is  clear  that  this  view  involves  a 
shirking  of  responsibility.  In  Australia,  whatever  he  may 
be  elsewhere,  the  director  is  a  trustee.  The  whole  spirit 
of  legislation  is  that  he  must  fulfill  his  trust  or  be  re- 
sponsible for  his  dereliction  of  duty.  Indeed,  in  one 
case  it  was  decided  that  a  director  was  compelled  to  make 
up  the  loss  in  value  of  shares,  where  he  had  told  a  share- 


208  THE  ECONOMICS  OF  MINING 

holder  who  had  asked  his  advice  on  the  subject  to  hold 
on  to  his  scrip.  Therefore,  as  directors  are  entrusted 
with  the  control  of  a  mine,  they  have  no  right  to  let  their 
mine  manager  regulate  the  yield  unless  they  are  fully 
cognizant  of  the  fact.  In  this  connection  it  must  be  ex- 
plained that  the  practice  in  Victoria  is  to  publish  yields 
weekly,  and  the  market  ebbs  and  flows  as  the  returns 
vary.  Hence  an  additional  reason  is  afforded  certain 
directors  for  not  inquiring  about  the  gold  reserve,  be- 
cause they  do  not  wish  to  be  open  to  the  charge  of  having 
secret  information  that  would  advantage  them  in  stock 
and  share  dealing  as  against  the  ordinary  shareholder. 
It  will  be  seen  that  in  this  question  of  the  gold  reserve 
two  factors  operate  with  mining  directors;  first,  that  of 
trust  reposed  in  the  mine  manager,  and,  second,  that  of 
keeping  the  market  steady  by  presenting  average  yields. 

When  a  short  time  ago  Mr.  Herbert  J.  Daly,  writing  in 
London  on  the  subject  of  the  gutting  of  the  bonanza  ore 
in  the  Lake  View  Consols,  justified  the  action  of  the 
management  in  that  matter,  he  came  in  for  criticism  in 
Australia.  The  argument  used  in  antagonism  to  his  was 
that  the  rushing  out  of  rich  ore  should  not  be  done,  un- 
less the  mine  is  well  developed  ahead,  and  the  company 
is  financially  so  strong  that  it  can  see  its  way  to  mine  in 
that  fashion  so  as  to  give  shareholders  a  return  in  the 
quickest  possible  time.  Concurrently  also,  it  is  claimed 
that  notification  ought  to  be  made  to  the  shareholders 
that  they  must  not  expect  their  yield  to  keep  up  at  a 
bonanza  rate.  Now,  if  the  opposite  policy  of  keeping  a 
bank  in  the  mine  is  pursued,  then  there  will  be  just  the 
same  scope  for  manipulating  yields  by  averaging  them 
that  there  is  when  a  manager  keeps  a  secret  reserve  at  the 
surface.  Yet,  in  that  case,  .the  directors  can  be  kept  in 
ignorance  unless  constant  sampling  is  done  and  assay- 
plans  are  regularly  furnished  to  them  to  show  how  the 
stopes  are  advancing  and  how  the  rich  ore  is  being  en- 


SECRET  RESERVES  209 

croached  upon  or  left  alone.  But  the  law  would  not,  as 
it  stands,  reach  a  mine  manager  who  did  this,  and  it 
could  not  touch  directors  who  might  not  know  anything 
of  the  true  position  of  affairs.  Of  course,  in  Victorian 
quartz  mines,  where  it  would  be  almost  fatal  to  a  com- 
pany from  a  share-market  point  of  view  to  refuse  to 
allow  a  weekly  or  fortnightly  inspection  of  the  property 
to  shareholders  or  their  experts,  it  would  not  be  possible 
long  to  conceal  any  depletion  of  the  rich  reserves,  or 
for  the  matter  of  that,  any  hoarding  up  of  them.  In  West 
Australia,  however,  there  are  mines  which  are  not  open 
to  inspection,  and  where  the  directors  put  themselves 
absolutely  in  the  hands  of  the  mine  managers.  In  such 
cases  it  is  evident  that,  if  the  frankness  commanded  by 
the  law  in  Victoria  in  respect  to  reports  and  accounts  is 
not  practiced,  great  fraud  is  possible.  Yields  can,  if  a 
manager  is  dishonest,  be  manipulated  so  that  if  shares 
are  wanted  to  be  bought,  returns  can  be  made  low,  and 
kept  low  until  scrip  is  bought  in  small  lots,  when  the  re- 
turn can  be  gradually  increased ;  the  result  being  a  sharp 
advance  in  market  values.  Then,  if  a  bank  is  in  exist- 
ence, but  the  average  ore  is  losing  its  richness,  shares 
can  be  sold  short  and  yields  maintained  until  the  crash  is 
wanted.  Thus  it  is  a  case  of  "Heads  I  win,  tails  you 
lose." 

The  same  position  exists  exactly  with  alluvial  mines, 
where  a  secret  reserve  is  kept.  The  company  is  in  the 
hands  of  the  men  who  know  of  it.  An  opening  for  fraud 
exists,  and  it  is  undoubted  that  more  than  one  mine  man- 
ager has  succumbed  to  the  temptation  put  in  his  way  to 
co-operate  on  the  Stock  Exchange  with  brokers  who  knew 
how  to  turn  to  account  the  secret  information  furnished 
them.  Thus  it  will  be  seen  that  wherever  reserves  of  any 
kind  exist  at  mines  the  personal  equation  must  rule,  first 
with  the  mine  manager ;  and,  if  he  is  honest,  next  with  the 
directors  to  whom  he  reports  the  true  position  of  affairs. 


210  THE  ECONOMICS  OF  MINING 

The  feeling  in  Victoria  today  is  that  there  ought  to  be 
no  personal  equation.  What  investors  want  is  that  they 
shall  know  the  worst  or  the  best  of  mining  and  at  once. 
If  the  ground  is  rich,  it  ought  to  be  fairly  mined  and  the 
fact  reported  that  the  yield  is  high  because  of  the  excep- 
tional quality  of  the  ore  or  the  gravel.  Or  if  the  ground 
becomes  poor,  they  do  not  want  the  manager  to  have  his 
eye  on  the  share  list  to  try  to  keep  quotations  at  a  fic- 
titious price  by  averaging  yields  at  a  figure  which  the 
condition  of  the  mine  does  not  justify.  They  want  the 
directors  to  establish  cash  reserves  (which  will  appear  in 
the  balance  sheet)  when  times  are  good,  and  to  equalize 
dividends  from  that  reserve,  or  to  use  it  to  keep  the  mine 
going.  And  above  all,  they  ask  that  the  truth  shall  be 
told  at  all  times  in  respect  to  the  position  of  the  mine 
and  as  to  the  actual  returns  obtained.  There  can  be  no 
doubt  as  to  the  trend  of  public  sentiment  in  this  matter, 
for  it  has  been  gravely  proposed  by  the  Chamber  of 
Mines  of  Victoria  that  mine  managers  shall  be  com- 
pelled to  accompany  all  their  reports  with  a  declaration 
that  the  contents  are  true.  Indeed  it  is  likely  that  the 
outcome  of  the  recent  discussion  on  secret  reserves  will 
be  that,  in  the  Amending  Companies  Bill,  an  attempt  will 
be  made  to  place  a  provision  to  that  effect  on  the  statute 
book.  Then,  if  managers  do  not  tell  the  truth,  they  will 
be  liable  to  a  criminal  prosecution  for  perjury,  and  di- 
rectors who  hold  back  facts  which  might  influence  the 
course  of  the  share  market  will  run  the  risk -of  becoming 
subject  to  action  for  breach  of  trust. 


THE  VALUATION  OF  GOLD  MINES 

BY  H.  C.  HOOVER. 

(May   19,   1904.) 

As  before,  this  discussion  is  limited  to  that  class  of 
gold  mines  the  continuity  of  which  in  depth  is  uncertain. 

If  a  broad  survey  be  made  of  the  method  of  valuation 
of  mines  in  different  countries,  by  different  peoples  or  by 
different  individuals,  there  will  be  seen  to  be  the  widest 
divergence  in  the  point  of  view.  The  pendulum  of  valua- 
tion swings  between  a  minimum  (as  represented  in  the 
demands  of  the  American  engineer  for  a  purchase  price 
to  exceed  but  little,  if  any,  the  actual  exposed  profit  in 
sight)  and  an  extreme  maximum  allowed  by  some  rep- 
resentatives of  the  English  mining  investor,  who  find  the 
value  by  capitalizing  the  possible  dividends  at  a  some- 
what higher  rate  of  interest  than  Government  bonds. 

The  whole  of  this  wide  variation  in  theory  and  practice 
results  from  a  different  attitude  toward  that  portion  of 
the  value  of  a  mine  which  must  be  assessed  to  extension 
in  depth.  The  one  extreme  allows  but  a  few  feet,  while 
the  other  practically  ignores  the  essential  characteristic  of 
mining  investments — the  necessity  of  recovering  capital 
coincidently  with  an  interest  which  compensates  for  the 
risks  taken. 

Were  we  to  stick  strictly  to  the  minimum  figure,  but 
little  business  would  take  place,  and  but  few  funds  would 
be  available  for  expansion  of  the  industry.  There  is  an 
inherent  speculation  in  mining,  and  it  is  this  speculation 
which  attracts ;  without  speculation  for  large  returns  but 
little  gold  mining  would  be  done.  I  think  it  is  certainly 
true  that  mines,  on  the  average,  yield  a  much  greater  profit 
than  the  minimum  stated.  On  the  other  hand,  it  is  ob- 
vious that  the  maximum  value,  which  one  finds  only  too 


212  THE  ECONOMICS  OF  MINING 

often  assessed  on  stock  markets  by  a  process  of  multi- 
plication of  dividends,  is  simply  gambling. 

Various  proposals  have  been  made  to  meet  this  di- 
vergence of  view ;  usually  they  are  attempts  to  give  a 
rule  to  the  speculator  or  investor  by  which  he  may  on 
the  average  measure  his  mine.  Every  mine  is  so  much  a 
problem  in  itself  that  all  generalization  is  difficult,  but 
any  sound  method  which  calls  the  attention  of  the  in- 
vestor to  the  real  basic  facts  of  valuation  and  tends  to 
keep  him  on  the  right  track,  is  useful. 

The  favorite  method  of  blending  the  extremes  has  been 
to  add  a  proportion  to  the  profit  in  sight.  In  a  recent 
issue  of  this  JOURNAL  it  is  advocated  that  in  general  a 
mine  is  worth  50  per  cent  more  than  the  net  profit  in 
sight,  or,  in  other  words,  the  extension  in  depth  is,  on 
the  average,  worth  this  amount. 

My  friend  Mr.  J.  H.  Curie,  working  on  somewhat  the 
same  basis,  in  outlining  a  theory  of  sound  investment  in 
mining  shares,  says  in  effect:1 

ist.  The  development  in  the  bottom  must  be  good; 

2nd.  The  mine  must  pay  10  per  cent  per  annum; 

3rd.  There  must  be  60  per  cent  of  the  price  of  the 
shares  in  sight. 

In  other  words,  with  favorable  geologic  conditions, 
Mr.  Curie  estimates  in  general  that  extension  in  depth 
is  worth  40  per  cent  of  the  whole  value,  or  66  per  cent  of 
the  profit  in  sight. 

I  take  it  that  these  schemes  of  valuation  refer  only  to 
the  safety  of  the  original  capital,  and  do  not  include 
interest  thereon,  it  being  considered  that  the  profit  of 
the  transaction  shall  arise  from  the  possibilities  beyond 
recovery  of  capital.  I  am  not  disputing  the  possibility 
of  thus  covering  the  necessary  profit,  but  there  seems 
something  wanting  where  there  is  no  expressed  basis  for 

1  The  Economist  (London),  Sept.  5,  1903. 


VALUATION  OF  GOLD  MINES  213 

calculating  the  time,  etc.,  to  gain  a  certain  interest  as 
well  as  recovery  of  capital. 

Theoretically,  at  least,  any  scheme  of  valuation  of  ex- 
tension in  depth,  based  upon  ratio  of  ore-reserves  or  profit 
in  sight,  is  wholly  wrong.  The  quantity  of  ore  in  re- 
serve is  a  matter  of  management  not  necessarily  de- 
pendent on  the  size  of  the  mine.  A  mine  may  have  a 
reserve  so  large  as  to  imply  an  extension  in  depth  be- 
yond all  reason,  or,  on  the  other  hand,  a  mine  may  be 
extremely  valuable,  with  no  profit  in  sight  at  all.  No 
mine  starts  out  with  an  ore-reserve,  and  upon  this  basis  of 
mine  valuation  the  whole  of  prospecting  ventures  would 
be  eliminated  from  legitimate  mining.  This  basis  of 
valuation  also  fails  to  take  into  account  the  great  vari- 
ability in  geological  character  between  different  mines 
and  different  districts  in  relation  to  probabilities  of  ex- 
tension in  depth.  Moreover,  if  I  am  right  in  the  'eco- 
nomic limit'  of  ore-reserves,  as  stated  in  a  previous 
article,  to  be  in  the  most  cases  from  two  to  three  years' 
output,  then,  owing  to  the  limit  reserves  thus  permissible, 
if  we  estimate  the  value  at,  say,  50  per  cent  more  than 
such  reserve,  the  majority  of  mines  would  yield,  on  above 
footings,  from  2o  per  cent  to  40  per  cent  per  annum. 

Inasmuch  as  the  value  of  the  mine  is  dependent  (out- 
side of  the  reserve  profit)  upon  the  distance  that  the 
deposit  will  extend  in  depth  (or,  in  rare  cases,  laterally) 
beyond  the  region  of  vision,  the  most  logical  basis  for 
estimation  would  be  a  computation  of  how  far  such  ex- 
tension is  necessary  to  justify  a  given  value,  or  to  what 
depth  the  particular  deposit  may  be  risked  to  so  extend; 
in  other  words,  the  depth  of  extension  should  be  con- 
sidered instead  of  a  proportion  of  the  profit  in  sight.  By 
such  a  method  not  only  would  broad  generalizations  be 
avoided,  but  a  sort  of  geological  basis  would  be  found. 
The  general  character  and  experience  of  the  district  for 
continuity;  the  special  conditions  of  each  particular  de- 


214  THE  ECONOMICS  OF  MINING 

posit  as  to  size  of  orebodies ;  the  known  factors,  such 
as  bore-holes;  the  development  on  adjoining  mines,  and 
the  possibilities  outside  of  immediate  orebodies,  etc., 
would  all  come  into  play  in  the  probabilities  assessed. 
These  factors  are  glossed  over  on  any  system  of  propor- 
tional values. 

An  example  of  the  working  of  these  methods  of  esti- 
mation may  be  taken,  for  instance,  by  grouping  the  lead- 
ing mines  in  West  Australia.  A  group  of  15  mines  in 
that  state  is  at  this  date  valued  on  the  London  market  at 
£14,500,000.  They  have  profit  in  sight  of  £10,500,000. 
Upon  a  basis  of  adding  66  per  cent  to  the  profit  in  sight, 
these  mines  are  about  correctly  valued.  To  recover  the 
capital  sum  represented  above,  they  will  have  to  extend 
something  like  250  ft.  below  the  present  bottoms,  and  to 
repay  capital,  and,  say,  6  per  cent  interest  during  the 
whole  period,  they  must  extend  about  480  ft.  below  their 
present  bottoms.  This  depth  is  not  an  unreasonable  risk, 
taking  all  matters  into  consideration.  On  average  over 
the  whole  group,  the  two  bases  of  valuation  agree  fairly 
well,  but,  taking  'A'  mine,  for  instance,  with  an  ore- 
pipe  30  by  90  ft.,  an  extension  of  480  ft.  is  very  prob- 
lematical indeed,  and  even  more  so  in  the  case  of  the 
*B'  mine,  composed  of  lenticules  of  ore  by  no  means 
certain,  even  laterally ;  yet  in  'C  mine,  with  two  parallel 
ore-shoots,  each  l,ooo  ft.  long  and  12  ft.  wide,  with  the 
adjoining  mine  proved  already  600  ft.  deeper,  even  a 
longer  life  could  be  granted. 

Taking  a  leading  mine  in  the  Kolar  district  in  India, 
valued  by  the  market  at  £3,600,000,  in  which  profit  in 
sight  is  roughly  £920,000,  the  proportional  value  would 
assess  it  to  be  worth  about  £1,450,000.  This  sum  of 
£1,450,000  would  not  only  be  recovered,  but  also  with 
interest,  by  an  extension  of  200  ft.  further  in  depth. 
With  a  continuous  run  of  ore  3,500  ft.  long,  and  the  gen- 
eral geological  conditions  favorable,  there  would  seem 


VALUATION  OF  GOLD  MINES  215 

to  be  warrant  for  confidence  to  considerably  greater 
depth  than  such  a  valuation  would  grant. 

In  the  detailed  judgment  as  to  the  probability  of  ex- 
tension in  depth,  as  stated  above,  other  conditions  being 
equal,  the  size  of  the  ore-body  becomes  the  greatest  fac- 
tor. An  ore-body  1,000  ft.  long  is  much  more  likely  to 
extend  than  one  10  ft.  long.  That  such  extension  is 
absolutely  proportional,  I  should,  of  course,  not  contend. 
An  old  Cornish  saying  was  that  an  orebody  would  ex- 
tend in  depth  a  distance  equal  to  its  length.  This,  al- 
though it  shows  an  appreciation  of  the  matter  from  ex- 
perience, does  not  meet  the  case  in  ore-shoots,  whose 
general  character  implies  greater  depth  than  length,  nor 
does  it  meet  the  case  for  partially  exhausted  mines. 

In  depth,  deposits  seldom  terminate  abruptly.  The 
lenticularity  of  ore-shoots  is  generally  recognized,  and 
that  ore-shoots  usually,  in  their  terminals,  display  len- 
ticular character  is,  I  think,  generally  accepted. 

If  this  were  established  as  an  average — a  worthy  prob- 
lem for  mining  geologists — it  would  be  possible  to  state 
roughly  that  the  minimum  extension  of  an  orebody  or 
ore-shoot  in  depth  would  be  a  factor  of  a  radius  not  less 
than  one-half  its  length.  By  length  is  not  necessarily 
meant  horizontal  length,  but  a  section  perpendicular  to 
the  downward  axis.  By  study  of  72  mines  with  whose 
orebodies  I  have  been  able  to  familiarize  myself,  I  find 
this  rule  of  minimum  to  apply  in  all  cases  but  two,  by 
taking  a  number  of  points  from  top  to  bottom  of  the 
workings.  Subject  to  wider  expression  of  experience,  I 
believe  that  an  amount  of  ore  thus  represented  can  be 
about  as  safely  assumed  as  can  the  continuity  of  value 
through  ore-reserves  blocked  out.  I  do  not  propose  this 
as  a  method  of  determination,  either  of  maximum  or 
minimum  value,  but  as  a  yard-stick  possibly  useful  in 
forming  a  judgment.  For  instance  in  the  *C*  mine, 
cited  above,  having  an  orebody  1,000  ft.  long,  by  such  a 


216  THE  ECONOMICS  OF  MINING 

calculation,  if  we  assume  that  the  orebody  is  about  to 
die  out,  and  that  the  bottom  workings  represent  a  cross- 
section  of  the  lens,  the  minimum  depth  would  be  500  ft., 
or  an  average  of  the  whole  section  of  the  orebody  about 
275  ft.  This  distance  (when  compared  with  the  necessity 
of  orebody  to  extend  only  200  ft.  to  return  the  present 
market  price,  and  only  480  ft.  to  return  the  price  and  in- 
terest) would  indicate  that  the  present  price  is  fairly 
sound. 

In  general,  the  proposal  is  that  this  class  of  mine  should 
be  valued  at,  (a)  the  profit  in  sight;  (b)  a  further  amount 
based  upon  the  extension  in  depth  of  the  orebody  (in 
volume  and  value  as  disclosed  at  its  lowest  section) 
for  a  distance  based  upon  the  probabilities  in  each  par- 
ticular mine,  instead  of  the  rough  and  ready  method  of  a 
proportion  of  profit  in  sight. 


TREATMENT  CAPACITY  AND   ORE- 
RESERVES 

(May   26,    1904.) 

The  Editor: 

SIR — I  confess  to  a  good  deal  of  disappointment  at  the 
meager  discussion  that  Mr.  H.  C.  Hoover's  article  on  this 
subject  has  elicited.  To  my  mind,  it  is,  from  its  form  of 
treatment,  the  most  important  on  the  generalities  of  min- 
ing engineering  that  we  have  seen  for  some  time  past. 

It  cannot  be  doubted  that  the  clear  understanding  of 
any  problem  in  the  abstract  assists  materially  in  the  mas- 
tery of  each  example  in  the  concrete;  and,  though  such 
abstract  understanding  may  not  be  the  sine  qua  non  of 
grasping  the  concrete,  those  with  the  clearest  understand- 
ing of  the  abstract  usually  err  the  least  in  the  concrete. 

Notwithstanding  the  examples  cited,  Mr.  Hoover's  pa- 
per is  one  of  generalities,  and  his  broad  generalizations, 
which  crystallize  into  words,  and  perhaps  in  a  somewhat 
novel  form,  the  practice  of  more  than  one  engineer,  can 
be  handled  with  safety  only  under  expert  advice,  being 
in  this  respect  decidedly  dangerous  in  lay  hands. 

As  an  instance,  the  temptation  is  almost  irresistible  for 
the  superintendent,  when  his  costs  are  cut  down  by  the 
addition  of  a  secondary  plant,  to  lower  the  grade  of  his 
ore  as  well,  by  the  inclusion  of  rock  that  would  have 
been,  but  for  the  secondary  plant,  below  treatment  grade. 
This,  however,  upsets  all  the  calculations  upon  which  the 
secondary  plant  was  authorized.  To  be  sure,  the  condi- 
tion of  the  mine  may  actually  justify  it,  but  unless  that 
were  recognized  as  among  the  factors  of  the  problem,  and 
allowed  for  when  additions  were  made,  the  property, 
with  the  increased  output  and  with  the  increased  capital 
outlay,  due  to  the  secondary  plant,  to  pay  interest  upon, 
will  actually  be  giving  a  less  return  per  centum. 


218  THE  ECONOMICS  OF  MINING 

While  the  exact  form  of  statement  made  by  Mr.  Hoo- 
ver of  the  fundamentals  of  the  problem  is  most  striking, 
I  am  far  from  sure  that  the  simple  comparative  method 
of  statement  of  the  case  of  the  primary  plant  for  a  num- 
ber of  years,  as  against  the  primary  plus  the  secondary 
for  the  same  number  of  tons  and  years,  is  not  simpler  and 
less  liable  to  error  in  calculation ;  at  all  events,  the  latter 
is  the  form  in  which  the  problem  suggests  itself  most  nat- 
urally, and  on  these  lines  the  following  table  of  coeffi- 
cients has  been  prepared.  It  is  assumed  that  current 
profits  are  transferred  into  interest-bearing  deposits  quar- 
terly, and  that  the  interest  rate  is  I  per  cent,  per  quarter. 
This  would  be  quite  compatible  with  common  business 
arrangements.  For  any  case  of  primary,  or  primary  and 
secondary,  plant  let  T  be  the  quarterly  tonnage  and  P 
the  profit ;  P  T,  then,  is  the  quarterly  profit. 

At  the  end  of  the  first  quarter  the  profits  will  be  P  T ; 
at  the  end  of  the  second  quarter,  P  T  plus  o.oi  P  T  or 
i.oi  P  T;  and  the  total  profit  for  the  two  quarters,  2.01 
P  T.  At  the  end  of  the  third  quarter  the  total  profit  will 
be  3.0301  P  T.  In  a  word,  the  case  is  that  of  the  amount 
of  an  annuity  of  I  in  n  years,  and  by  the  formula  for  this 
(Kent,  p.  15)  the  coefficients  can  be  worked  out.  For 
the  assumed  case  and  for  six  years  they  are  given  below : 

COEFFICIENTS  OF  P  T. 

GAIN. 

Quarterly.  Total. 


9  Months. 

6 

9        " 

1  Year  .. 
3  Months 
6 

9 

2  Years   . 

3  Months 
6 

9        " 
3  Years   . 
3  Months 


I. 

.01          2.01 
.O20I        3.O30I 

.0303  4.0604 
.0406        S.IOIO 

.05IO  6.1520 

.0615  7-2135 

.0721  8.2856 

.0829  9.3685 

.0937  10.4622 

.1046  11.5663 

.1157  12.6825 

.1268  13.8093 

.1381  14-9474 


CAPACITY  AND  ORE  RESERVES. 


219 


GAIN. 

Quarterly.  Total. 

6  Months   1495  16.0969 

4  Years   1610  17 . 2579 

3  Months 1726  18.4305 

6                  1843  19.6148 

9        "         1961  20.8109 

5  Years   2081  22.0190 

3  Months 2202  23 . 2392 

6                  2324  24.4716 

9        "         2447  25.7163 

6  Years   2572  26.9735 

The  practical  use  of  this  is  illustrated  below  for  two 
extreme  cases : 

Primary  Plant. 

Case  i.  Case  2. 

Tonnage  per  quarter 7,5OO  7,500 

Profit  per  ton .-. $1.00  $1.00 

Quarterly  profit  (P  T) $7,500.00  $7,500.00 

Fixed  charges  .30  I .  oo 

Primary  and  Secondary  Plants. 

Tonnage  per  quarter 10,000  10,000 

Profit  per  ton  increased  tonnage $1-30  $2.00 

Profit  per  ton  on  whole  tonnage 1 .075  1 .25 

Quarterly  profit  (P  T) 10,750.00  12,500.00 

Using-  the  coefficients  as  above  given  and  substituting 
the  values  of  P  T,  we  get  the  following: 

Case  i.  Case  2. 

Case  i  &  2,            Primary  &  Primary  & 

Primary.            Secondary.  Secondary. 

Tons    60,000  

Time   2  yrs.            1^2  yrs.  il/2  yrs. 

Profit   $62,000             $66,000  $77,ooo 

Plus  interest  for  two  quar- 
ters,  compounded . . .          ....                67,000  79,000 

Gain  over  primary ....                $5,ooo  $17,000 

Tons    90,000                   .... 

Time 3  yrs.            2%  yrs.  2%  yrs. 

Profit    $95,000            $101,000  $117,000 

Plus  interest  for  three  quar- 
ters, compounded 104,000  121,000 

Gain  over  primary ....                $9,000  $26,000 

Tons    120,000  ....  

Time    4  yrs.                3  yrs.  3  yrs. 

Profit    $129,000            $136,000  $159,000 

Plus  interest  for  four  quar- 
ters compounded ....              143,000  165,000 


Gain  over  primary 


$14,000 


$36,000 


220  THE  ECONOMICS  OF  MINING 

By  this  comparison  (of  what  may  be  a  normal  with  an 
exceedingly  abnormal  case  of  fixed  charges)  is  clearly 
shown  the  important  part  this  fixed-charge  item  of  Mr. 
Hoover's  plays,  a  part  so  important  as  to  call  for  the 
careful  segregation  of  all  such  items  in  mine  accounting, 
so  that  the  ratio  of  plant  to  reserves  may  be  readily  and 
constantly  canvassed,  without  the  necessity  of  a  special 
and  laborious  investigation.  Mr.  Hoover's  separate  items 
of  gain  are  all  included  'automatically'  in  the  figures 
14,000  and  35,000  (120,000  tons  and  four  years,  Cases  i 
and  2),  thus,  10,000  tons  per  year  for  three  years  equals 
30,000  tons,  the  increased  tonnage  per  year,  and  fixed 
charges  for  the  two  cases  would  be  $9,000  and  $30,000 
respectively,  and  the  several  interest  items  amount  to,  ap- 
proximately, $5,000  and  $6,000;  so  that  fixed  charge 
plays  by  far  the  most  important  part. 

While  going  with  Mr.  Hoover  in  the  foregoing  to  the 
full  extent  of  his  argument  regarding  the  maximum  per- 
missible ore  reserves,  I  do  not  care  to  accede  unreserved- 
ly to  the  proposition  that  the  'maximum'  provided  as 
above  should  also  form  the  minimum.  There  are  certain 
classes  of  deposits  that,  from  geological  structure  and  oc- 
currence, can  be  reckoned  on  more  definitely,  within  their 
limits,  than  the  standard  quartz  vein ;  there  are  also  con- 
ceivable cases  where  the  additional  security  of  the  invest- 
ment would  seem  to  be  too  clearly  bought  by  keeping  a 
three  or  four  years'  reserve  blocked  out.  Such  would  be 
the  case  of  a  mine  with  many  small  veins  and  heavy 
ground,  where  the  additional  charge  for  repairs  and  for 
interest  on  development  would  seriously  impair  the  prof- 
its. With  such  particular  cases  in  mind,  the  minimum 
proposition  quoted  does  not  appear  so  inevitable  as  the 
maximum,  though  it  can  be  granted  that  in  the  majority 
of  instances  it  affords  a  safe  rule  for  practice. 

R.  OILMAN  BROWN. 
San  Francisco,  May  12,  1904. 


AMORTIZATION 

(June   2,    1904.) 

The  Editor: 

SIR — The  subject  of  'Mine  Equipment  and  Ore  Re- 
serves' has  been  so  well  treated  by  experts  in  the  JOUR- 
NAL that  I  hardly  feel  competent  to  join  in  the  discussion 
from  the  scientific  side.  I  would  like,  however,  to  say  a 
few  words  on  the  question  of  amortization,  which  hardly 
seems  to  be  understood  by  some  of  your  correspondents. 
I  feel  further  disposed  to  do  so  as  some  of  my  friends 
have  asked  for  a  little  instruction  on  this  point.  The 
word  amortization  is  French,  but  it  is  a  good  onesto  take 
over  into  English  speech,  as  we  have  no  single  word 
which  expresses  the  idea.  Sinking  fund  does  not  cover 
it,  for  that  is  applied  only  to  some  special  provision  for 
the  payment  of  bonded  debt  or  debentures.  As  nearly 
as  I  can  express  it,  amortization  is  the  provision  from 
earnings  of  a  fund,  independent  of  dividends,  which  will, 
in  a  given  period,  repay  the  original  investment.  To 
provide  such  a  fund  is  not  usual  in  this  country,  though 
it  is  frequently  done  in  Europe;  and  in  France,  at  least, 
it  is  required  by  the  law  governing  the  operations  of  in- 
corporated companies. 

A  mining  investment,  in  the  great  majority  of  cases, 
is  a  terminable  investment,  not  a  permanent  one.  That 
is,  it  will  end  and  become  unproductive  after  a  time, 
shorter  or  longer,  according  to  the  nature  of  the  mine. 
It  is  not  a  permanent  investment,  like  a  railroad,  which 
may  be  expected  to  last  and  to  return  profits  for  an  in- 
definite period.  A  mining  investment,  therefore,  to  be 
good,  should  return  not  only  ordinary  interest  on  the 
capital,  but  a  further  sum,  sufficient  to  repay  the  orig- 
inal capital  during  the  life  of  the  mine.  A  railroad,  for 
instance,  with  proper  allowance  for  repairs  and  renewals, 
will  probably  be  earning  profits  and  be  worth  at  least  as 


222         m  THE  ECONOMICS  OF  MINING 

much  as  now,  twenty  or  forty  years  hence ;  and  its  owners 
will  still  have  the  security.  But  twenty  or  forty  years 
from  now  the  owners  of  a  mine  now  profitable  may  have 
nothing  but  some  extensive  excavations  and  a  lot  of  ma- 
chinery, which  is  likely,  at  the  best,  to  be  worth  only  its 
selling  value  as  scrap.  So  with  all  mining  investments ; 
they  run  with  the  life  of  the  mine,  and  the  return  should 
be  large  enough  to  equal  the  capital,  plus  interest,  during 
that  life,  whatever  it  may  be. 

In  France  the  usual  custom,  I  believe,  is  to  divide  the 
amortization  fund  among  the  stockholders  when  the  com- 
pany has  to  go  out  of  business.  In  Germany  very  little 
amortization  is  done,  for  the  German  custom  is  to  nurse 
a  mine  and  carry  it  along  forever  by  taking  as  little  out 
of  it  as  possible  each  year.  The  exception  is  found  in  a 
few  of  the  big  coal  companies,  and  they  have  amortiza- 
tion funds,  which  are  usually  applied  to  the  purchase  of 
more  coal  lands.  In  England  they  do  not  say  amortiza- 
tion, for  your  Englishman  has  a  strong  propensity  to 
call  things  by  names  that  mean  something  else.  But 
they  have  depreciation  funds,  surplus  funds  and  what- 
not, which  amount  to  the  same  thing.  There  are  various 
ways  of  using  these  funds.  That  most  approved  seems 
to  be  the  purchase  of  new  property,  so  that  the  company 
may  be  kept  alive.  Occasionally  the  funds,  whatever  they 
may  be  called,  are  returned  to  stockholders ;  this  is  often 
done  by  buying  in,  or  paying  off,  part  of  the  stock  from 
time  to  time,  so  that  the  capital  stock  is  reduced  grad- 
ually, as  the  mine  decreases  in  value.  The  continuance 
of  the  company,  with  a  new  property,  seems  the  favorite 
method,  however.  The  Englishman  is  cosmopolitan  in 
his  investments,  and  there  are  sometimes  curious  changes. 
Thus,  some  years  ago,  a  company  which  had  been  mining 
in  Idaho  gave  up  its  exhausted  property  and  bought  a 
mine  in  Western  Australia,  still  retaining  its  old  name. 
Such  instances  might  be  multiplied. 


AMORTIZATION  223 

Except  in  France,  there  seems  to  be  no  uniform  rule 
as  to  the*  manner  in  which  payments  are  made  to  amorti- 
zation funds.  The  fairest  and  most  uniform  method 
seems  to  be  a  fixed  charge  on  ore  mined,  based  either  on 
quantity  or  on  value,  according  to  the  nature  of  the  mine. 

In  this  country  amortization  funds  are  not  usual.  The 
general  practice  is  to  pay  out  surplus  in  dividends,  leav- 
ing each  stockholder  to  make  his  own  amortization,  if 
he  is  disposed  to  do  so — usually  he  is  not.  This  is  based 
on  the  continual  shifting  of  stock  ownership.  With  few 
exceptions  the  American  investor  does  not  buy  mining 
stocks  to  keep.  He  sells  them  when  he  has  a  chance  to 
make  something.  It  has  been  said  that  the  ownership  in 
an  American  mining  company  changes,  on  an  average, 
every  five  years ;  and,  quite  probably,  this  is  not  far  from 
the  truth.  Under  these  circumstances,  it  is  quite  natural 
that  a  stockholder  should  prefer  to  get  all  that  he  can 
out  of  his  shares  while  he  holds  them,  without  looking 
to  the  future. 

An  exception  is  found  in  some  coal  and  iron  compa- 
nies. Thus  the  Delaware  &  Hudson  Company  includes 
in  its  expenses  a  fixed  sum  per  ton  of  coal  mined,  which 
goes  into  a  fund  which  has  been,  up  to  date,  used  to  pay 
off  the  company's  mortgage  bonds.  These  are  now 
nearly  all  retired.  The  Reading  Company  has  done  the 
same  thing  since  its  last  reorganization.  The  Pittsburg 
Coal  Company  has  a  similar  charge  on  earnings,  the  sum 
thus  set  aside  being  used  chiefly  to  buy  new  coal  lands. 
In  the  last-named  case  the  amount  has  been  calculated 
on  such  a  basis  that  the  fund  will  replace  the  coal  lands 
mined  out  each  year,  and  so  keep  the  company  going  as 
long  as  there  are  new  lands  to  be  bought. 

Among  iron  companies,  several  of  the  larger  Southern 
companies  also  make  a  charge  to  earnings  based  on  the 
iron  ore  and  coal  mined  each  year.  The  Sloss-Sheffield 
Company,  in  addition,  makes  a  charge  of  2$c.  for 


224  THE  ECONOMICS  OF  MINING 

each  ton  of  pig  iron  made,  the  fund  being  used  to  renew 
its  plant.  The  Oliver  Iron  Company,  which  is  the  iron 
mining  branch  of  the  United  States  Steel  Corporation, 
has  a  system  of  charges  based  on  ore  mined. 

In  none  of  these  cases,  however,  except  the  Delaware 
&  Hudson,  are  these  funds  applied  to  reduction  of  capital, 
and  they  are  not,  therefore,  properly  amortization  funds. 
The  iron  mining  companies  referred  to  also  own  manu- 
facturing plants,  and  it  is  essential  to  their  operation  that 
the  supply  of  ore,  or  raw  material,  should  be  kept  up. 
The  retirement,  or  repayment,  of  capital  is  not  consid- 
ered in  the  matter. 

On  the  whole,  I  do  not  think  that  American  buyers  oi 
mining  stock  will  take  kindly  to  amortization  funds,  un- 
der present  conditions.  They  prefer  to  trust  to  them- 
selves, and  to  the  chance  of  selling  their  stock,  to  allow- 
ing the  company  to  look  after  the  repayment  of  their 
capital  at  some  indefinite  future  date.  As  long  as  this 
feeling  lasts  the  practice  of  amortization  can  hardly  ex- 
tend. 

Some  day  we  may  take  time  to  think  a  little  about  it, 
and  then  I  believe  the  justice  and  reason  of  the  plan  will 
be  realized.  And  it  may  do  something  also  to  promote 
permanence  and  stability  in  mine  ownership — which  is  a 

thing  much  to  be  desired. 

F.  HOBART. 
New  York,  May  10,  1904. 


VALUATION  OF  GOLD  MINES 

(June    9,    1904.) 

The  Editor: 

SIR — I  agree  with  Mr.  Hoover  in  his  interesting  ar- 
ticle of  May  19,  that  every  mine  is  a  problem  in  itself; 
there  are  no  fixed  principles  by  which  the  appraiser 
may  be  guided  to  a  definite  and  correct  value  by  the  rules 
of  mathematics.  Because  if  he  deals  with  averages,  or 
laws  of  probability,  as  to  the  life  and  profit  of  such  gold 
mines  in  general,  or  even  of  the  mines  in  a  special  dis- 
trict, he  will  as  a  rule  arrive  at  very  erroneous  results. 
It  is  one  of  those  cases  in  engineering  practice  where 
experience,  skill  and  judgment  are  of  the  utmost  im- 
portance to  get  even  an  approximate  solution. 

The  method  which  I  have  found  most  satisfactory  is 
about  as  follows :  Having  correctly  valued  the  ore  in 
sight,  the  size,  shape  and  relative  positions  of  the  ore- 
bodies  should  be  mapped  to  scale,  and  compared  with  those 
of  the  exhausted  orebodies  for  at  least  three  years  pre- 
vious. Then,  by  comparison,  try  to  find  the  law  of  contin- 
uity and  value.  Next,  by  that  law,  together  with  a  study 
of  the  history  of  the  most  developed  mines  in  the  dis- 
trict, decide  on  a  definite  figure  for  the  undeveloped  por- 
tion of  the  mine.  Having  thus  arrived  at  a  definite  value 
for  the  whole  mine,  the  next  question  to  consider  is  the 
economic  ratio  of  development  to  milling  capacity.  Then 
the  gross  profits  in  the  mine  and  the  time  necessary  to 
exhaust  the  same.  Lastly,  an  estimate  should  be  made  of 
the  extra  capital  necessary  fully  to  equip  and  develop,  to 
reach  the  economic  ratio.  Having  found  all  these,  the 
extra  capital  should  be  subtracted  from  the  gross  profit, 
and  the  balance  capitalized,  so  as  to  yield  10  per  cent 
per  annum  during  the  time  necessary  for  exhaustion,  and 
at  the  same  time  redeem  the  principal. 

As  an  illustration,  let  us  take  the  15  Westralian  mines, 


226  THE  ECONOMICS  OF  MINING 

which  Mr.  Hoover  says  have  a  gross  profit  in  sight  of 
about  £10,000,000;  and  suppose  the  appraiser  adds  an- 
other £10,000,000  for  profit  in  undeveloped  ground.  Now, 
if  he  considers  £2,000,000  necessary  to  put  those  mines 
on  an  economic  ratio,  so  that  they  would  be  exhausted  in 
30  years,  then  his  valuation  would  be  £4,500,000,  instead 
of  £14,500,000,  as  Mr.  Hoover  makes  it.  Because  £20,- 
000,000  —  £2,000,000  =  £18,000,000.  And  £18,000,000 
capitalized  at  10  per  cent  per  annum  for  30  years,  with 
the  principal  redeemed  during  that  time,  is  represented 
by  £450,000  X  30  +  £4,500,000  =  £18,000,000,  the  total 
amount  of  profit  in  the  properties  mentioned. 

Mr.  Hoover  thinks  that  6  per  cent  is  sufficient  interest 
to  pay  on  mining  investments,  but  I  think  most  engineers 
will  agree  with  Mr.  Curie  that  10  per  cent  is  a  fair  figure, 
over  and  above  the  redemption  of  the  principal. 

There  is  another  question  in  the  valuation  of  mines  of 
every  kind  which  is  of  sufficient  importance  to  be  men- 
tioned here.  And  when  the  time  comes  that  Prof. 
Church  says  ought  to  come  if  investors  wish  to  be  pro- 
tected, when  the  president  of  every  mining  company  is  a 
qualified  mining  engineer,  then  every  mine  will  be  valued 
annually  by  an  independent  engineer,  just  as  the  books 
are  audited  by  an  independent  accountant.  I  trust 
the  Institute  of  Mining  Engineers  will  take  this  matter 
up,  and  have  a  law  passed  compelling  mining  companies 
to  have  their  inventories  and  valuations  tried  by  an  in- 
dependent engineer  before  the  auditor  will  accept  them. 

ROBERT  STEVENSON. 
New  York,  May  25,  1904. 


MINE  EQUIPMENT  AND  ORE-RESERVES 

(June  23,    1904.) 

The  Editor: 

SIR — The  article  on  ore-reserves  and  mine  equipment 
by  Mr.  H.  C.  Hoover  covers  the  particular  field  dis- 
cussed by  him  with  such  skill  that  it  seems  to  me  there  is 
not  much  more  to  say.  Unfortunately  most  of  us  do  not 
have  the  opportunity  of  unraveling  the  problems  per- 
taining to  the  exploitation  of  such  magnificent  mines  as 
those  which  Mr.  Hoover  directs,  nor  do  we  operate  with 
the  reserve  capital  of  such  strong  companies  as  those 
with  which  he  is  connected.  The  mining  future  of  this 
country  depends  to  an  ever-increasing  extent  on  the  profit- 
able exploitation  of  relatively  small,  erratic  and  low-grade 
deposits ;  in  other  words,  in  making  hard  propositions 
pay.  The  West  has  been  pretty  well  run  over,  and  it  is 
probable  that  most  of  the  big  things  are  already  under 
process  of  development;  and  while,  of  course,  some  of 
us  will  be  working  bonanzas  for  several  generations,  the 
vast  majority  of  mining  engineers  will  be  continually  up 
against  a  hard  game.  It  is  the  problems  pertaining  to  the 
successful  operation  of  such  deposits  which  more  vitally 
concern  the  majority.  To  my  mind  there  is  more  credit 
due  to  those  who  take  up  the  hard  propositions  and  make 
them  pay  than  to  those  who  exploit  bonanzas  along  finely 
scientific  lines ;  the  first  usually  require  energy,  sagacity, 
perseverance  and,  very  often,  daring;  while  the  other 
need  chiefly  cool  calculation.  The  acquiring  and  early 
development  of  the  bonanza  is  a  different  matter ;  in  this 
achievement  much  the  same  qualities  are  called  for  as  in 
the  operation  of  a  hard  proposition.  But  only  a  few  of 
us,  as  already  stated,  will  ever  have  the  opportunity  to 
acquire  a  bonanza  for  ourselves  or  clients,  so  we  may  just 


228  THE  ECONOMICS  OF  MINING 

as  well  look  the  facts  in  the  face  and  consider  the  prob- 
lems incident  to  the  operation  of  that  large  class  of  de- 
posits with  which  most  of  us  are  more  or  less  directly 
associated.  In  such  cases  the  amortization  of  the  equip- 
ment becomes  an  even  more  serious  problem  than  i^  the 
instances  discussed  by  Mr.  Hoover,  for  it  becomes  doubt- 
ful whether  the  expenditure  will  ever  be  amortized  at  all, 
rather  than  a  question  of  how  many  months  will  be  re- 
quired to  get  even.  And  yet  conditions  of  operation,  as 
they  exist,  often  force  an  expenditure  for  equipment  be- 
fore one  can  figure  the  ore  reserve  to  justify  it.  It  may 
be  necessary  to  equip  and  begin  production,  or  quit  alto- 
gether. In  such  cases  I  think  a  man  is  justified  in  using 
the  most  temporary  expedients,  rather  than  in  providing 
such  an  equipment  as  would  be  called  for  if  a  long  cam- 
paign were  actually  assured. 

It  has  been  my  observation  that  more  mines  are  killed 
by  too  much  equipment,  and  ill-advised  equipment,  than 
from  errors  in  the  opposite  direction.  The  tendency  to 
make  large  expenditures  to  assure  a  low  working  cost 
per  ton  has  been  at  the  bottom  of  many  a  mining  failure, 
because  the  hard  facts  of  the  limited  number  of  tons 
available  and  the  utter  worthlessness  of  abandoned  mine 
equipment  were  both  entirely  overlooked.  The  sure  loss 
of  operating  with  inefficient  equipment  and  the  possible 
loss  of  expending  too  much  on  equipment,  present  the 
Scylla  and  Charybdis  of  this  feature  of  mine  manage- 
ment; the  admirable  sailing  chart  compiled  by  Mr. 
Hoover  will  guide  the  big  steamers  with  scientific  accu- 
racy; but  the  pilot  of  the  little  sailing  vessel,  driven  by 
fickle  winds  and  diverted  by  unseen  currents,  cannot  fol- 
low the  directions,  and  under  such  conditions  success  is 
the  more  admirable  and  failure  the  more  pardonable. 

It  seems  to  me  that  the  question  incident  to  providing 
the  ordinary  mine  with  equipment  does  not  permit  of  any 
very  extended  discussion,  along  general  lines,  because 


ORE-RESERVES  229 

nearly  every  mine  has  its  own  individual  problem,  and  those 
that  haven't,  fall  without  question  under  Mr.  Hoover's 
rule ;  but  there  is  an  infinite  variety  to  the  problems  con- 
fronting the  average  mine  manager,  and  the  successful 
solution  of  hard  problems  of  management  make  the  basis 
of  what  is  to  many  of  us  the  most  interesting  form  of 
mining  literature.  The  consideration  of  the  difficulties 
that  have  beset  our  fellows  and  of  the  means  they  adopted 
to  overcome  them  is  sure  to  be  of  practical  service  sooner 
or  later;  and  in  the  hope  that  I  may  be  able  to  start  the 
ball  a-rolling  in  this  direction,  I  will  mention  three  in- 
stances out  of  my  personal  experience. 

The  estate  of  W.  S.  Stratton,  deceased,  included  some 
713  acres  of  territory  in  the  Cripple  Creek  district  of  Col- 
orado. There  is  little  of  this  territory  from  which  there 
has  been  no  shipment  of  ore,  and  some  parts  of  it  have 
made  a  large  production.  The  pay  ore  is  found  in  iso- 
lated bodies  scattered  through  a  perfect  network  of  veins, 
contacts,  and  mineralized  dikes.  The  grade  of  the  ore  at 
Cripple  Creek  is  comparatively  high,  so  that  a  relatively 
small  orebody  may  be  of  considerable  economic  impor- 
tance. As  a  consequence  of  these  conditions,  the  problem 
of  finding  the  ore  very  much  overshadows  any  other 
problem  in  the  exploitation  of  these  deposits.  The  suc- 
cessful 'ore-finder'  is  the  man  who  makes  an  exhaustive 
study  of  a  given  locality  and  then  watches  every  little 
indication  as  work  progresses.  The  failure  to  follow  off 
into  the  wall  the  smallest  stringer  that  assays  may  mean 
the  loss  of  a  good  orebody.  The  most  successful  'ore- 
finders'  in  the  camp  are  the  small  'leasers,'  whose  self- 
interest  calls  forth  a  degree  of  astuteness  and  careful 
attention  to  detail  which  is  not  obtainable  in  a  paid  force. 
Therefore,  I  recommended  that  the  territory  which  was 
not  developed  by  deep  shafts  should  be  leased  in  surface 
blocks,  and  that  a  large  part  of  the  territory  that  was  de- 
veloped by  deep  shafts  should  be  let  on  the  tribute  sys- 


230  THE  ECONOMICS  OF  MINING 

tern.  This  plan  has  been  slowly  put  into  effect,  and,  thus 
far,  the  results  are  highly  satisfactory. 

At  the  Golden  Cloud  mine  in  Montana  the  vein  is 
small,  remarkably  continuous  and  of  exceptionally  uni- 
form value.  The  average  grade  is  $25  per  ton  in  gold 
and  the  property  is  equipped  with  a  good  mill.  The 
quartz  is  soft  and  frozen  to  the  walls,  and  the  problem 
to  be  solved  was  how  to  mine  this  ore  cleanly  at  a  cost 
sufficiently  low  to  leave  a  margin  of  profit.  When  work- 
ing on  day's  pay  the  miners  found  the  quartz  very  nice 
drilling  ground  and  shot  it  all  to  pieces,  so  I  put  them  on 
a  contract  system  whereby  each  pair  of  men  had  a  certain 
block  of  ground  and  were  paid  so  much  per  ton  of  clean 
quartz  delivered  at  the  mouth  of  the  tunnel.  The  system 
has  proved  satisfactory  thus  far. 

At  the  Cornucopia  mine  in  eastern  Oregon  in  1896  the 
principal  problem  to  be  solved  was  the  successful  milling 
of  a  rebellious  ore.  Mr.  T.  A.  Rickard,  as  consulting 
engineer,  was  in  control  of  operations.  My  position  was 
a  subordinate  one.  The  ore  carried  part  of  its  values  as 
free  gold,  part  as  silver,  gold,  copper  and  lead  in  pyrite 
and  part  as  telluride  of  gold.  When  Mr,  Rickard  took 
charge  there  was  a  2O-stamp  mill  on  the  ground  equipped 
with  six  vanners,  the  product  of  which  was  chlorinated, 
with  a  heavy  loss,  mainly  in  the  roasting  stage  of  the 
process.  This  loss  had  been  undetected  by  reason  of 
stupidity  in  calculations,  which  failed  to  allow  for  the 
decrease  in  weight  by  elimination  of  moisture  in  roast- 
ing. The  shipment  of  the  concentrate  to  the  smelter  at 
Tacoma  gave  larger  profits,  but  even  then  the  extraction 
was  poor,  by  reason  of  the  values  escaping  in  that  part  of 
the  tailing  which  would  pass  a  loo-mesh  screen. 
Mr.  Rickard  and  Mr.  Barnhart,  the  superintendent,  then 
decided  to  introduce  hydraulic  separators,  two  more  van- 
ners and  a  canvas  slime  plant,  so  that  the  extraction  was 
increased  from  65  per  cent  to  85  per  cent,  and  the  mine 


ORE-RESERVES  231 

became  a  profitable  enterprise.  The  essence  of  this  suc- 
cess was  not  only  in  the  improved  extraction  which  was 
attained  at  every  step  of  the  milling  process,  but  in  a 
general  reduction  of  working  costs  carried  out  by  the 
superintendent.  ^  }  BANCROFT. 

Seattle,  Wash.,  June  10,  1904. 


THE   ECONOMIC  RATIO  OF  TREATMENT 
CAPACITY  TO  ORE-RESERVES 

(July    14,    1904.) 

The  Editor: 

SIR — Under  the  above  heading  appears  an  article  by 
Mr.  H.  C.  Hoover  in  your  issue  of  March  24.  As  this  sub- 
ject forms  one  of  the  most  important  of  the  financial 
problems  with  which  the  engineer  has  to  deal,  it  would  be 
advantageous  to  have  it  fully  discussed  and  ventilated  by 
men  in  different  parts  of  the  world,  and  I  put  that  view 
forward  as  my  excuse  for  the  remarks  that  follow. 

The  general  impression  made  upon  my  mind  after  care- 
fully reading  through  Mr.  Hoover's  article  is  that  while 
keeping  the  main  issues  well  in  view,  he  is  somewhat  ob- 
scure as  to  the  basis  of  his  reasoning,  and  as  to  the  many 
contingencies  for  which  provision  must  be  made  before 
the  well-known  maxims  which  he  expounds  can  be  prac- 
tically employed.  It  may  therefore  be  well  to  further  dis- 
cuss some  of  the  questions  he  has  raised,  with  a  view  to 
greater  elucidation  and  further  suggestion. 

Mr.  Hoover  states  as  a  preliminary :  "Starting  with  an 
assumption  of  unbroken  continuity  to  their  utmost  boun- 
daries, our  South  African  friends  need  but  little  outside 
of  compound  interest  tables  upon  which  to  found  their 
finance.  In  the  great  majority  of  mines,  however,  the 
result  of  development  at  their  lowest  levels  remains  specu- 
lative and  gives  a  zest  such  as  an  assumed  persistence 
can  never  afford."  It  seems  to  me  that  Mr.  Hoover  has 
imbibed  the  popular  idea  that  the  art  of  mining  on  the 
Rand  is  conducted  upon  such  simple  lines,  owing  to  nat- 
ural conditions,  that,  as  he  says,  "our  South  African 
friends  need  but  little  outside  of  compound  interest  tables 
upon  which  to  found  their  finance."  It  should  be  under- 
stood by  engineers,  at  least,  and  I  affirm  it  now,  that  the 


ORE-RESERVES  233 

mines  of  the  Rand  are  subject  to  as  extreme  fluctuations 
in  value  as  deposits  of  any  other  kind,  and  that  it  is 
equally  necessary  on  these  fields  to  develop  skilfully  and 
far  in  advance  of  the  mill  as  upon  any  other  goldfield,  if 
any  knowledge  of  the  conditions  governing  the  problems 
discussed  by  Mr.  Hoover  is  to  be  acquired. 

The  essential  difference  between  the  Rand  'banket'  beds 
and  metalliferous  deposits  of  differing  origin  is,  that  in 
the  former  we  are  not  called  upon  to  contemplate  the 
complete  disappearance  of  our  values  within  the  limits 
so  far  worked — a  contingency  which  always  has  to  be 
reckoned  with  in  other  forms  of  deposit.  It  is  just  as 
necessary,  however,  that  reserves  should  be  well  ahead 
of  mill  requirements  for  the  consideration  of  the  question 
of  the  ratio  of  treatment  to  ore  reserves;  otherwise  for 
one  period  the  mines  would  be  earning  large  profits,  and 
for  another  they  would  be  working  at  a  loss.  On  the 
Rand,  equally  with  other  fields,  we  must  consider  the 
possible  rate  of  development,  which  is  governed  by  the 
facilities  for  attack,  the  ore  exposed  per  foot  driven,  and 
the  percentage  of  payable  ore  to  the  total  developed. 

In  some  sections  of  the  Rand,  the  reef  averages  less 
than  6  in.  wide;  and,  if  in  such  cases  the  proportion  of 
payable  ore  is  as  low  as  30  per  cent,  and  if  the  develop- 
ment scheme  is  rendered  bad,  as  is  the  case  in  some  in- 
stances, by  faults  or  dikes,  then  it  is  clear  that  the  plain 
sailing  which  Mr.  Hoover  believes  is  an  essential  condi- 
tion of  mining  work  here,  is  an  erroneous  conviction. 

In  the  second  paragraph  of  his  article  Mr.  Hoover 
states  "that  the  most  economical  and  profitable  treatment 
capacity  is  the  maximum  capacity  which  can  be  employed, 
is  not  difficult  to  demonstrate;  that  the  maximum  must 
depend,  however,  upon  the  speed  of  development,  and  that 
the  speed  of  development  must  be  pushed  as  fast  as  the 
limitations  of  nature  will  permit,  is  but  to  state  a  corol- 
lary. Yet,  curious  as  it  seems,  the  number  of  mines 


234  THE  ECONOMICS  OF  MINING 

which  have  been  operated  upon  the  principle  that  the 
mill  is  the  fixed  quantity  and  the  mine  the  variable,  ex- 
ceeds the  number  conducted  upon  the  reverse  plan/'  This 
sentence  aptly  illustrates  my  view  as  to  the  obscurity  of 
Mr.  Hoover's  basis  of  reasoning.  The  statements  are  en- 
tirely true,  but  there  is  a  variety  of  principles  involved 
which  cannot  be  thus  settled  by  a  stroke  of  the  pen. 
Firstly,  we  must  consider  the  financial  status  of  the  com- 
pany operating,  as  to  whether  it  is  in  a  position  to  make 
the  monetary  arrangements  necessarily  involved  in  a 
scheme  for  expansion.  Let  us  take  a  case  as  an  example. 
Assume  a  company  owning  a  property  which  requires 
^500,000  to  bring  it  to  the  producing  stage  on  a  basis  of 
100  stamps.  To  find  such  a  sum  of  money  might  not  only 
exhaust  all  the  cash  resources  of  the  company,  but  cause 
it  to  overdraw  to  the  extreme  limit  of  its  credit.  Let  it 
be  assumed  that  the  company  has  commenced  milling 
and  is  earning  profits.  It  is  now  suggested  that  it  should 
accept  Mr.  Hoover's  dictum  "that  development  must  be 
pushed  as  fast  as  the  limitations  of  nature  will  permit." 
To  carry  out  the  suggestion  one  of  the  following  alterna- 
tives might  be  adopted :  either  a  loan  to  cover  excess  de- 
velopment, or  profits  might  be  utilized  for  the  purpose  of 
extra  development.  As  the  company  is  assumed  to  have 
no  further  credit,  it  cannot  adopt  the  first  alternative,  and 
for  the  same  reason  in  this  instance  it  would  not  be  likely 
to  adopt  the  second.  The  further  view,  that  current  profits 
should  be  utilized  for  the  benefit  of  the  later  sharehold- 
ers, would  also  be  contested  by  the  present  shareholders, 
who  naturally  would  want  a  cash  distribution  as  soon  as 
such  was  available. 

In  this  instance,  therefore,  although  Mr.  Hoover's  dic- 
tum is  in  every  sense  correct,  it  would  be  impossible  to 
accept  his  policy.  The  basis  of  reasoning  must  therefore 
include : 

I.  Financial  credit. 


ORE-RESERVES  235 

2.  An  agreed  basis  of  arrangement  as  to  the  manner  in 
which  the  capital  will  be  raised,  namely: 

(a)  Whether  as  a  direct  loan. 

(b)  By  the  issue  of  reserve  shares. 

(c)  By  the  utilization  of  current  profits. 

(d)  By  increasing  the  company's  capital. 

As  he  leaves  the  reader  to  guess  these  alternatives  it 
has  seemed  to  me  pertinent  to  mention  them. 

Mr.  Hoover  well  remarks,  in  the  concluding  sentence 
of  the  quotation  I  have  made,  that  the  mill  is  in  general 
regarded  as  the  fixed  quantity  and  the  mine  as  the  varia- 
ble. In  my  'Deep  Level  Mines  of  the  Rand/  it  was  shown 
that  if  a  company  running  a  2OO-stamp  mill  on  a  mine 
with  a  2O-years'  life  earned  an  annual  profit  of  £336,000, 
the  present  value  of  the  total  profit  of  £6,720,000,  allow- 
ing 6  per  cent  for  dividends,  and  3  per  cent  for  amortiza- 
tion of  capital,  would  be  £3,456,768.  If,  however,  the 
total  amount  of  £6,720,000  is  discounted  as  a  yearly  divi- 
dend of  £672,000  for  ten  years  on  the  same  basis  as  be- 
fore, the  present  value  of  the  amount  becomes  £4,564,224, 
or  £1,107,456  greater  than  the  same  amount  earned  in  a 
2O-year  period.  In  other  words,  if  the  milling  equip- 
ment is  increased  at  intervals,  and  the  mine  worked  out  in 
ten  years  instead  of  twenty  years,  the  net  gain,  even  after 
allowing  for  extra  expenditure  for  increased  equipment, 
in  the  instance  taken,  is  materially  increased. 

It  is  difficult  to  get  the  financial  controllers  of  mines 
always  to  follow  the  engineer  in  this  respect.  They  ob- 
ject that  there  is  a  constant  shifting  of  the  financial  basis, 
while  there  is  new  equipment  to  be  erected,  and  excess  de- 
velopment to  be  accomplished,  and,  strangely,  they  have 
a  sentimental  liking  for  a  longer  life,  which  has  the  one 
element  of  possible  participation  in  improved  working 
conditions  to  recommend  it.  If  the  engineer  can  see  be- 
forehand that  the  property  to  be  worked  is  one  likely  to 
lend  itself  to  a  scheme  of  this  kind,  he  can  suggest  to  the 


236  THE  ECONOMICS  OP  MINING 

financial  heads  the  provision  of  reserve  shares,  which  can 
be  issued  from  time  to  time  to  meet  the  capital  require- 
ments, and  thus  the  current  earnings  of  the  mine  are  not 
diverted. 

Mr.  Hoover  says :  "We  now  divide  the  various  charges 
against  working  expenses  into :  First,  those  charges  vari- 
able with'tonnage,  such  as  development,  haulage,  treat- 
ment, etc. ;  and  second,  those  charges,  usually  referred  to  as 
'fixed,'  which  depend  partially  upon  the  element  of  time 
as  well  as  tonnage,  and  include,  partially  or  wholly,  pump- 
ing, management,  amortization  of  capital  invested,  etc." 
Although  not  entirely  relevant  to  the  subject  under  im- 
mediate discussion,  some  remarks  upon  this  and  kindred 
heads  may  not  be  out  of  place.  The  development  charge 
on  a  mine  is  one  susceptible  of  very  diverse  treatment. 
There  are,  however,  two  methods  which  are  legitimate, 
and  properly  suit  special  conditions.  The  variation  in  the 
conditions  arises  out  of  a  question  of  policy,  which  again 
may  be  dictated  by  the  financial  resources  at  command. 
One  engineer  may  recommend  that  the  mine  be  developed 
for  a  mill  of  fixed  capacity  and  to  such  an  extent  before 
milling  begins,  that  there  will  be  no  subsequent  necessity 
to  develop  at  a  more  rapid  rate  than  the  mill  require- 
ments, that  is  to  say,  the  total  ore  reserves  are  practically 
unchanged.  In  such  a  case  the  cost  of  development  is 
rightly  charged  to  working  account  as  a  lump  sum.  For 
the  same  property  as  above  assumed,  another  engineer 
may  recommend  development  of  the  mine  on  a  compara- 
tively low  basis,  and  two  years  ahead  of  the  mill.  He 
may  question  the  soundness  of  a  policy  of  sinking  large 
capital  sums  in  development  work  many  years  ahead  of 
requirement,  because  the  interest  on  the  sum  should 
rightly — although  in  practice  it  is  not — be  charged  against 
the  developed  ore. 

After  the  mill  starts,  the  policy  laid  down  provides  for 
rapid  excess  development  and  periodical  increases  to  the 


ORE-RESERVES  237 

equipment,  for  which  policy  the  necessary  financial  pro- 
vision has  been  made.  As  the  rate  of  development 
might  easily  absorb  the  total  working  profits,  the  latter 
are  not  diverted,  but  the  development  work  is  paid  for 
out  of  the  capital  each  month.  At  the  end  of  the  year  the 
accounts  are  made  up  and  it  is  found  that,  say,  200,000 
tons  of  ore  have  been  developed,  costing  £50,000.  The 
working  charge  per  ton  milled  would,  therefore,  be 
debited  with  an  amount  of  5  shillings  per  ton — the  cost 
to  develop — in  order  to  gradually  redeem  the  development 
at  cost. 

The  question  of  amortization  of  capital  in  a  mining 
undertaking  is  a  very  difficult  one,  and  I  cannot  follow 
Mr.  Hoover  in  his  view  that  it  should  be  made  a  fixed 
charge  against  working  costs.  Amortization  can  only  be 
fixed  on  a  definite  knowledge  of  the  profitable  term  of  an 
undertaking.  If  a  mine  be  figured  to  have  a  life  of  ten 
years,  and  it  ultimately  proves  to  have  twenty,  or  vice 
versa,  the  charge  for  amortization  will  in  the  first  in- 
stance have  been  too  heavy,  and  in  the  latter  too  light.  The 
best  principle  is  that  the  company  should  not,  as  a  com- 
pany, attempt  to  amortize.  The  value  of  its  shares  on  a 
given  earning,  on  the  basis  of  amortization  of  capital  or 
otherwise,  can  be  readily  computed  by  the  investor.  If 
the  company  puts  aside  an  annual  amount  as  amortization, 
it  naturally  reduces  the  distributable  profits,  and  these 
might  possibly,  if  distributed  in  full  to  the  shareholder, 
be  reinvested  by  him  with  immediate  benefit.  Moreover,  if 
investors,  who  bought  interests  in  the  earlier  stages  of  the 
mine,  sold  out  at  a  later  date,  the  profits  which  they  should 
have  received  would  accumulate  to  the  advantage  of  the 
investor  who  bought  during  the  later  stages  of  the  com- 
pany's career,  and  thus  the  former  would  be  at  a  disad- 
vantage, unless  the  market  appreciation  of  the  company's 
policy  of  amortization  were  fully  reflected  in  the  share 
value  throughout.  It  should  be  the  business  of  the  share- 


238  THE  ECONOMICS  OF  MINING 

holder  in  his  individual  capacity  to  amortize  his  invest- 
ment, but  not  that  of  the  company  in  its  corporate 
capacity. 

Mr.  Hoover  says :  "In  these  cases  less  than  three  years' 
accumulation  of  the  increment  of  profits  is  required  to 
amortize  the  entire  capital  involved."  He  does  not  ex- 
plain how  he  will  deal  vwith  the  amortization.  If  it  is 
written  off  profits,  the  future  shareholder  benefits  to  the 
prejudice  of  the  present,  and  there  is  a  reduction  of'  divi- 
dend for  that  period  which  may  affect  the  price  of  the 
stock.  If  the  secondary  equipment  be  paid  for  out  of  cap- 
ital the  earnings  on  the  greater  capital  sum  entailed  must 
be  considered. 

I  cannot  follow  Mr.  Hoover  in  his  treatment  of  amor- 
tization of  outlay  on  plant.  I  take  it  that  a  good  plant 
on  any  mine  has  a  life  of  not  less  than  seven  years, 
and  with  proper  care  and  sound  maintenance  much 
longer.  Let  it  be  taken,  however,  at  seven  years.  Now, 
if  the  cost  of  plant,  as  suggested  by  Mr.  Hoover,  is  writ- 
ten off  in  three  years,  there  would  appear  to  be  a  loss  on 
the  transaction,  unless  the  added  profits  will  amply  com- 
pensate for  the  potential  loss  in  plant.  The  figures  as  he 
gives  them  show  only  about  a  similar  net  result,  in  the 
cases  of  the  primary  and  secondary  equipments,  after 
deducting  the  capital  outlay  on  the  latter.  The  sole  ad- 
vantage would  then  be  the  difference  in  the  present  value 
of  the  ultimate  profit  earned,  and  if  we  take  it  that  this  is 
£100,000,  the  advantage  of  earning  it  in  three  years  in- 
stead of  six  represents,  on  a  basis  of  6  per  cent  for  divi- 
dends and  3  per  cent  for  amortization,  £9,210.  Mr. 
Hoover  takes  it  that  on  the  primary  basis  a  three  years' 
reserve  should  be  figured  upon.  If  the  development  in- 
creased so  rapidly  that  a  six  years'  reserve  is  built  -up 
(although  he  does  not  suggest  how  he  arranges  his  finances 
in  the  meantime),  then,  if  I  read  him  aright,  he  would  add 
secondary  equipment  to  such  an  extent  as  to  make  the 


ORE-RESERVES  239 

reserve  again  three  years.  But  supposing  that  no  more 
payable  ore  were  discovered,  then  it  seems  on  his  own 
showing  that,  saving  the  aspect  of  the  increased  present 
value  of  the  profits,  there  is  no  special  advantage  in  the 
scheme. 

Suppose,  for  instance,  we  have  a  loo-stamp  mill  which 
crushes  168,000  tons  per  annum.  A  reserve  of  six  years 
for  such  a  mill  would  be  1,008,000  tons.  Now,  if  we 
build  another  100  stamps  and  utilize  the  increment  of 
profit  to  amortize  the  outlay  we  get  a  result  somewhat  as 
follows : 
Cost  of  100  stamps,  'secondary  equipment/  and 

all  accessories,  including  power,  etc £100,000 

Additional  water  supply,  pumps,  etc 10,000 

Additional  buildings,  quarters,  etc 10,000 


Total £120,000 

Assume  profit  on  the  loo-stamp  basis  to  be  10  shillings 
per  ton. 

Assume  profit  on  the  2OO-stamp  basis  to  be  12^  shillings 
per  ton,  the  increment  of  profit  due  to  adding  100 
stamps  is : 

% Total  profit  earned  on  loo-stamp  basis  in  six 

years,  1,008,000  tons  at  IDS.  per  ton £504,000 

Total  profit  earned  on  2OO-stamp  basis  in  three 

years,  1,008,000  tons  at  12^3 630,000 

Total  increment  of  profit £126,000 

Total  cost  of  secondary  equipment 120,000 

Balance,   profit £6,000 

If  interest  be  added  to  the  capital  outlay  incurred  for 
the  secondary  equipment,  the  balance  shown  will  dis- 
appear. 

In  mines  of  uncertain  continuity  in  depth  it  would 
therefore  appear  necessary  to  make  a  more  conservative 


240  THE  ECONOMICS  OF  MINING 

ratio  of  equipment  to  ore-reserve  than  that  mentioned 
by  Mr.  Hoover.  If,  as  I  have  suggested,  the  payable  ore 
were  suddenly  to  give  out  when  sufficient  reserves  to 
provide  an  increment  of  profit  that  would  just  amortize 
the  capital  outlay  in  additional  plant  had  been  secured, 
then  the  mine  would  possibly  be  prejudiced  in  the  follow- 
ing way.  All  mines  are  found  in  practice  to  contain  the 
ore  in  shoots,  streaks,  pockets  or  patches.  As  the  work- 
ings progress  it  becomes  clear  that  a  process  of  selection 
has  been  in  practice,  by  which  ore  falling  below  a  certain 
standard  in  grade  is  allowed  to  remain  in  the  mine.  The 
longer  the  mine  is  worked  the  greater  becomes  the  aggre- 
gate tonnage  of  more  or  less  developed  ore  of  a  grade  fall- 
ing belong  the  arbitrary  limit  of  payability.  It  is  a  truism, 
however,  that  in  every  mining  field  the  costs  of  production 
vary  directly  with  the  age  of  the  field;  in  other  words, 
there  is  a  practically  continuous  reduction  in  costs  year 
by  year.  In  the  instance  I  have  previously  assumed  of 
a  mine  having  a  final  reserve  of  six  years'  payable  ore  on 
a  'primary'  basis,  it  is  probable  that  large  quantities  of  ore 
left  in  the  mine  which  are  unpayable  during  the  first  of 
the  final  six  years  would,  through  decreasing  costs  of 
production,  improved  methods,  whether  mining  or  metal- 
lurgical, fall  within  the  limits  of  profitable  working  before 
the  first  year's  work,  and  therefore  the  mine  would,  under 
these  conditions,  secure  a  new  lease  of  life,  on  ore  of  a 
grade  which,  if  worked  out  in  a  three  years'  period  would 
still  be  unpayable,  despite  the  lower  operating  costs  of  an 
increased  installation.  There  should,  therefore,  be  a  big 
margin  of  increment  of  profit  allowed  over  and  above  the 
amortization  of  plant  amount,  and  even  then  I  doubt  if 
the  scheme  is  a  satisfactory  one,  notwithstanding  that  the 
objects  aimed  at  are  undoubtedly  desirable. 

It  appears  to  me  obvious  that  in  mines  of  uncertain 
continuity  in  depth  there  can  be  a  definite  and  satisfactory 
basis  of  ratio  of  equipment  to  ore-reserves  established, 


ORE-RESERVES  241 

but  on  a  plan  different  to  that  proposed  by  Mr.  Hoover. 
The  conditions  of  such  mines  call  for  very  advanced 
development,  not  only  to  enable  their  future  possibilities 
to  be  gauged,  but  to  put  the  operators  in  a  position  to 
average  up,  over  the  widest  possible  area,  the  grade  of 
the  ore  developed,  in  order  that  steady  outputs  may  be 
maintained  Further,  by  such  a  scheme  it  is  possible  to 
include  a  large  tonnage  of  ore  near — but  just  below — the 
arbitrary  limit  of  payability,  which  would  inevitably  be 
untouched  if  the  mines  were  worked  on  narrow  margins 
of  development. 

After  all,  the  whole  matter  under  discussion  rests  upon 
th£  courage  and  resources  of  those  who  control  the 
finances  of  the  company.  Every  engineer  has  experienced 
a  difficulty  at  some  time  or  other  in  persuading  the  finan- 
cial heads  of  a  mining  business  to  carry  development  even 
one  year  ahead  of  the  mill,  owing  generally  to  shortness 
of  funds.  If  they  can  be  persuaded  to  follow  the  advice 
of  the  engineer  I  believe  the  right  policy  to  be  the  fol- 
lowing, which  I  submit  with  all  deference: 

It  is  assumed  that  preliminary  prospecting  has  been 
finished  and  a  scheme  for  permanent  work  is  to  be  pro- 
vided. 

First  Step. — The  mine  to  be  opened  out  for  examina- 
tion, to  such  an  extent  that  data  for  a  sound  development 
policy  can  be  formulated. 

Second  Step. — A  development  policy  framed,  including 
estimates  of  cost ;  time  to  carry  it  out ;  and  probable  ton- 
nage and  value  of  ore  that  will  be  opened  up. 

Third  Step. — From  the  information  to  be  gained  as 
the  development  proceeds,  a  justifiable  limit  for  ore-re- 
serves to  be  fixed,  taking  into  account  all  the  variables  of 
width  of  reef,  percentage  of  payable  ore  per  100  ft.  driven, 
and  facilities  for  attack. 

Fourth  Step. — A  mill  of  a  capacity  fixed  by  the  limit 
of  ore  reserves  to  be  erected,  which  reserves  should  not 


242  THE  ECONOMICS  OF  MINING 

be  less  than  the  total  which  the  mill  would  crush  if  worked 
continuously  for  two  years. 

Fifth  Step. — Development  to  be  continued,  at  least  at 
the  milling  rate,  on  payable  ore. 

For  the  time  being  these  are  all  the  steps  which  in  a 
sound  policy  can  be  formulated.  The  mine  now  works 
steadily  ahead  for  a  couple  of  years  (more  or  less,  as  the 
circumstances  decide ),  proves  its  ability  to  make  a  profit 
on  this  basis,  and  the  question  of  further  additions  is 
suggested  by  the  engineer.  Before  these  additions  can  be 
agreed  upon  by  the  financial  heads  they  must  settle  the 
details  of  the  scheme  by  which  they  propose  to  finance, 
which  will  be  one  of  the  following :  .r  1 

A.  Diversion  of  current  profits. 

B.  Temporary  loan  to  be  paid  out  of  profits,  over  an 
extended  period. 

C.  Increase  of  capital  of  the  company. 

D.  Issue  of  already  existing  reserve  shares. 

Of  these,  the  last  named  is  in  my  opinion  undoubtedly 
the  soundest  and  most  equitable  to  all  shareholders,  for 
reasons  which  I  have  explained  many  times  in  other 
writings. 

Sixth  Step. — The  engineer,  having  gained  by  experi- 
ence a  full  knowledge  of  the  mine  and  its  capabilities, 
suggests  that  development  should  be  advanced  at  such  a 
rate  that  the  excess  tonnage  of  payable  ore  (over  and 
above  that  required  to  maintain  a  stipulated  reserve  for 
the  primary  equipment)  should  at  the  end  of  a  given  period 
allow  for  a  liberal  margin — say  six  years — on  an  addi- 
tional unit  of  reduction  and  treatment  plant.  Assume  that 
the  primary  unit  is  50  stamps  with  a  three  years'  reserve 
of  252,000  tons  of  ore,  and  assume  the  first  addition  to  be 
10  stamps,  requiring  a  reserve  on  a  six  years'  basis  of 
100,000  tons,  then  when  the  60  stamps  begin  working 
the  reserve  would  stand  at  352,000  tons,  equivalent  to  3.5 
years.  Development  would  again  be  pushed — provided 


ORE-RESERVES  243 

always  that  the  conditions  permitted — to  such  an  extent 
that  the  reserve  of  3.5  years  would  be  maintained  for  60 
stamps  and  excess  tonnage  gained  to  give  six  years'  re- 
serve for  an  additional  10  stamps,  when  the  latter  unit 
could  be  added,  bringing  the  mill  capacity  up  to  70  stamps 
and  the  ore-reserve  to  3.8  years'  work  for  the  whole  mill. 
The  same  process  would  again  be  followed  through,  and 
the  net  result  would  be  a  gradual  gain  in  milling  power, 
and  with  each  unit  of  addition  of  plant,  an  advance  in  the 
ratio  of  reserves.  When  five  years'  reserve  has  been  built 
up  on  the  lines  above  indicated,  by  which  time  the  mill 
will  contain  150  stamps,  the  question  of  increasing  the 
units  of  addition  from  10,  the  standard  up  to  this  point, 
to  15  or  20  stamps  can  be  safely  considered,  and  thus 
throughout  the  mine  will  maintain  a  legitimate  and  per- 
fectly sound  ratio  between  ore-reserves  and  equipment, 
and  will  fulfill  the  essential  requirement  of  winning  the 
ultimate  profit  from  the  mine  in  the  shortest  time  con- 
sistent with  sound  and  prudent  management. 

It  will  doubtless  be  said  that  the  scheme  I  have  out- 
lined— indeed  this  whole  question — is  too  elaborate  for 
consideration  in  connection  with  the  ordinary  mining 
'prospect,'  because  mines  are  frequently  opened  and 
worked  by  people  with  limited  means  at  their  command, 
to  whom  it  is  vital  that  the  producing  stage  should  be 
reached  at  the  earliest  possible  moment,  without  regard 
to  the  question  of  ore-reserves.  One  has  to  admit  that 
the  industry  of  mining  can  be  conducted  on  widely  vary- 
ing principles,  and  expediency  will  often  ride  rough-shod 
over  systems;  but  mining  business  which  is  conducted 
upon  the  method  of  expedients,  although  perhaps  it  is  a 
necessary  stage  of  such  a  business,  cannot  be  regarded 
as  either  safe  or  substantial,  and  if  the  principles  which 
this  article  is  intended  to  elucidate  do  not  apply  in  any 
given  case,  then  I  think  so  much  the  worse  for  that  case. 

Johannesburg,  June  6,  1904.  G*  A-  DENNY- 


EQUIPMENT  AND  ORE-RESERVES.— IV. 

(Editorial,  July  21,    1904.) 

The  discussion  upon  this  important  subject  has  been 
revived  by  the  valuable  contribution  from  Mr.  G.  A. 
Denny,  which  we  published  last  week.  Our  readers  will 
join  with  us  in  appreciation  of  so  earnest  and  thorough  a 
presentation  of  his  views.  Such  discussion  fulfills  one 
of  the  highest  purposes  of  technical  journalism. 

Many  aspects  of  the  inquiry  were  touched  upon  in  the 
letter  referred  to.  One  of  them  calls  for  present  notice. 
Mr.  Denny  demurs  to  Mr.  Hoover's  suggestion  that  the 
banket  of  the  Rand  is  so  uniform  in  persistence  and  in 
the  grade  of  ore  that  mining  finance  in  South  Africa  is 
shorn  of  all  the  bristling  dangers  arising  from  the  vaga- 
ries of  ore  deposition  elsewhere.  Both  of  these  experi- 
enced engineers  are  right,  relatively ;  for  it  is  altogether  a 
matter  of  comparison.  The  reefs  of  the  Rand,  in  their 
uniform  tenor  and  continuity,  do  somewhat  resemble  coal 
seams — more  than  they  do  'gash-veins/  for  example, 
lenses  in  schist,  or  'pockets'  in  limestone.  As  compared 
with  these  types  of  uncertainty  in  ore  occurrence,  they  are 
strikingly  regular  and  calculable;  and  yet  when  judged 
by  such  a  standard  of  uniformity  as  a  coal  seam,  the  gold- 
bearing  lodes  of  the  Rand  vary  within  margins  wide 
enough  sometimes  to  try  the  nerves  of  cautious  financiers. 
Recent  events  have  emphasized  this.  The  shares  of  the 
Bonanza  company  fell  from  £6J  to  £2,  because  the  grade  of 
the  ore  opened  up  declined  so  much  that  the  estimated  life 
of  the  mine  was  reduced  from  over  four  years  to  about  20 
months.  This  is  one  of  the  shares  which  have  been 
authoritatively  considered  as  certainties,  outside  the  limits 
of  ordinary  speculation.  On  the  other  hand,  the  life  of 
Crown  Reef  has  been  extended  in  estimates  from  seven 
years'  supply  of  ore  for  120  stamps,  to  14  years' 
supply  for  240  stamps,  simply  because  previous  calcula- 


EQUIPMENT  AND  ORE-RESERVES       245 

tions  had  only  included  the  material  to  be  obtained  from 
the  South  Reef  and  the  Main  Reef  Leader,  while  later 
developments  have  demonstrated  that  the  wider  Main 
Reef  itself  can  be  reckoned  upon  for  an  exceedingly  big 
tonnage  of  payable  ore.  Facts  such  as  these  indicate  that 
plans  for  equipment  are  likely  to  be  disturbed  by  the  un- 
foreseen even  at  Johannesburg.  Indeed,  we  doubt  very 
much  if  gold  mining  would  have  half  the  zest  to  the  in- 
vestor if  the  element  of  speculation  were  entirely  elimi- 
nated, and  it  is  well  at  all  times  to  emphasize  the  essential 
distinction  between  even  the  best  mining  venture  and  the 
securities,  such  as  first-class  bonds,  the  safety  of  which  is, 
humanly  speaking,  guaranteed.  Bonds  give  absolute 
safety  and  a  very  low  rate  of  interest ;  mines  yield  a  high 
return  with  an  inevitable  risk;  in  some  cases  the  risk  is 
small  and  the  return  is  large ;  in  others,  otherwise.  Both 
are  equally  legitimate  as  investments.  As  mining  be- 
comes freed  from  foolishness  and  develops  on  a  sound 
basis,  mining  shares  tend  increasingly  to  attract  shrewd 
men  because  the  proportion  of  risk  to  return  becomes 
lessened,  while  in  the  case  of  bonds,  that  relation  becomes 
less  attractive  because  the  safety  remains  no  greater,  and 
no  less,  while  the  plethora  of  trust  funds  slowly  brings 
about  a  fall  in  the  rate  of  interest  receivable. 


EQUIPMENT  AND  ORE-RESERVES.— V. 

(Editorial,   August   4,    1904.) 

In  a  recent  discussion  of  this  subject,  reference  was 
made  to  the  diminution  in  working  costs  as  a  mining 
region  grows  older.  Anyone  inaugurating  a  mining  enter- 
prise may  well  afford  to  consider  this  factor,  before  plan- 
ning for  a  lessening  of  expenses  on  the  basis  of  a  large 
and  costly  equipment.  It  is  not  always  realized  how  great 
is  the  drop  in  costs  which  follows  upon  the  improved 
conditions  consequent  upon  the  growth  of  a  goldfield. 
In  1894  the  average  cost  of  realizing  upon  the  gold  per 
ton  of  ore  shipped  from  Cripple  Creek  must  have  been 
fully  $40.  At  that  time  the  smelters  charged  $15  per  ton 
for  treatment,  the  railway  took  $5  per  ton,  and  these  de- 
ductions, with  the  higher  cost  of  supplies  and  machinery, 
made  a  fearful  inroad  into  profits.  Only  high-grade  ore 
could  be  handled,  sorting  was  necessary,  and  this  multi- 
plied the  original  expense  of  mining.  Within  five  years 
the  smelter  rate  went  down  to  $6.50  and  the  railway 
charge  to  $3 ;  and  in  later  years  the  erection  of  large,  cen- 
trally situated  chlorination  and  cyanide  mills,  competing 
in  the  ore  market  with  the  smelters,  brought  the  total 
charge  for  both  transport  and  treatment  to  a  minimum, 
on  low-grade  ores,  of  $5  per  ton. 

In  Western  Australia,  in  1897,  the  costs  in  the  outlying 
goldfields  averaged  more  than  the  value  of  an  ounce  of 
gold.  The  scarcity  of  water,  the  dearth  of  timber  and  its 
transport  from  elsewhere  by  camels,  the  distance  from 
distributing  centers  and  the  want  of  experience  in  the 
metallurgical  treatment  of  the  ores — all  these  factors 
united  in  rendering  expenses  so  high  as  to  kill  the  mining 
of  medium-grade  ores.  Within  a  couple  of  years  the  ex- 
tension of  the  railways,  arrangements  for  securing  water 
from  idle  mines  and  the  skill  put  into  the  milling  meth- 


EQUIPMENT  AND  ORE-RESERVES       247 

ods,  reduced  costs  by  30  to  50  per  cent.  .This  was  done 
without  any  increase  of  equipment. 

The  minimum  figures  of  recent  years  are,  of  course, 
the  result,  in  large  part,  of  better  equipment  and  a  larger 
scale  of  operations ;  but,  quite  aside  from  this  factor,  the 
general  conditions  existing  during  the  earlier  years  of 
mining  in  Western  Australia  and  in  the  Cripple  Creek 
region  changed  for  the  better  so  much,  that,  on  the  same 
tonnage  and  the  same  equipment  at  the  same  mine,  the 
expenses  went  down  within  five  years  to  the  extent  of 
fully  50  per  cent.  That  is,  to  put  it  plainly,  at  Cripple 
Creek  costs  averaged  $40  in  1894  and  $23  in  1899;  in  the 
outlying  districts  of  Western  Australia  they  averaged 
$22  in  1897  and  $10  in  1902.  It  is  obvious  that  the  incre- 
ment of  profit  to  be  gained  from  a  larger  output  would 
have  been  exceeded  during  this  period  by  the  economies 
due  to  the  rapid  improvement  in  local  conditions,  and 
that  a  management  which  deferred  the  enlargement  of  its 
equipment  would  have  won  a  larger  final  profit  than  one 
which  wasted  its  ore-reserves  in  meeting  the  heavy  ex- 
penses incidental  to  the  youth  of  a  mining  district. 

The  subject  is  one  to  which  we  will  return.  It  is  well 
to  add  that  the  high  costs  at  Cripple  Creek  were  due  to 
the  fact  that  of  the  ore  mined  not  more  than  one-third 
underwent  shipment;  even  in  rich  mines  one-half  was 
sorted  out,  in  others  as  much  as  three-quarters  or  even 
more.  Thus  the  cost  was  high  per  ton  of  ore  realized. 
This  was  due  to  the  nature  of  the  ore  occurrence. 
Costs  are  now  about  $14  per  ton  as  compared  to  $23  in 
1899,  not  so  much  because  general  conditions  have  gone 
on  improving,  but  by  reason  of  the  larger  capacity  of  the 
custom  mills  and  the  bigger  proportion  of  those  low-grade 
ores  on  which  treatment  charges  are  relatively  low.  In 
Western  Australia,  similarly,  since  1902  the  beneficent 
results  of  the  Coolgarlie  water  scheme,  the  extension  of 
the  railways,  the  improvements  in  ore  reduction  and  the 


248  THE  ECONOMICS  OF  MINING 

sense  of  stability  due  to  the  opening  up  of  large  reserves 
of  ore  have  warranted  estimates  of  an  increment  of  profit 
due  to  larger  equipment,  and  today  even  an  outlying 
mine  like  the  Cosmopolitan  exhibits  working  costs  as 
low  as  $5.44  per  ton,  inclusive  of  development  and  taxes. 
Considerations  such  as  these  prove  that  the  solution  of 
the  problem — the  ratio  of  equipment  to  ore-reserves — 
must  be  determined  by  the  local  conditions  of  each  case, 
and  not  upon  general  theory,  however  well  founded.  But 
a  working  theory  is  quite  necessary,  in  order  to  start  with 
intelligent  ideas  upon  the  subject. 


ORE-RESERVES  IN  GOLD  MINES 

(August    4,    1904.) 

The  Editor: 

SIR — I  have  just  been  re-reading  Mr.  Hoover's  articles 
of  March  24  and  May  19,  and,  if  not  too  late  in  the  field, 
I  will  make  a  few  remarks  on  some  points  raised  by  him. 

Mr.  Hoover  says  that  "the  maximum  profit  from  any 
(gold)  mine  can  only  be  obtained  by  the  most  rapid  ex- 
haustion of  the  mine,  and  that  most  rapid  exhaustion  is 
to  be  secured  only  by  the  most  vigorous  prosecution  of 
development  and  the  maximum  equipment  that  can  be 
employed."  He  then  goes  on  to  show — as  a  result  of 
carrying  out  this  system — that  an  economic  limit  to  a 
mine's  ore  reserves  intrudes  itself  as  a  factor,  and  that 
this  economic  limit  works  out  at  about  three  years.  From 
the  technical  point  of  view  I  feel  sure  that  Mr.  Hoover's 
arguments  are  correct.  They  are  unanswerable,  and  can- 
not but  be  endorsed  by  technical  men. 

Now  let  us  look  at  ore  reserves  from  the  point  of  view 
of  those  who  buy  the  shares.  What  do  they  say?  It  is 
a  true  saying  that  'those  who  pay  the  piper  call  the  tune,' 
and  as  the  investors  in  gold  mines  furnish  the  capital 
wherewith  the  industry  is  kept  going,  it  is  only  right  that 
their  side  of  the  argument  should  carry  weight.  I  will 
assume  that  these  people  know  as  much  about  sound 
finance  as  Mr.  Hoover  does  about  economic  mining — in- 
deed, you  will  find  H.  C.  Hoover,  Esq.,  the  capitalist, 
among  their  number. 

The  argument  of  one  of  this  investors'  class  would  be 
as  follows :  "I  have  money  to  invest  and  intend  to  put  it 
in  gold  mines.  I  have  a  sound  knowledge  of  finance, 
and  believe  that,  besides  the  value  of  any  capital  in  the 
mining  industry,  my  personality  will  have  a  sound  and 
steadying  influence  on  a  class  of  securities  hitherto  held  by 
many  people  in  disrepute.  But  if  I  come  in,  and  find 
money,  I  bring  in  with  me  my  knowledge  of  sound 


250  THE  ECONOMICS  OF  MINING 

finance,  and  I  insist  that  the  investments  placed  before 
me  shall  conform  to  a  certain  degree  of  safety,  which  de- 
gree I,  not  you,  shall  decide.  I  see  that  from  the  technical 
point  of  view  Mr.  Hoover's  claim  for  an  ore-reserve  of 
only  three  years  is  sound ;  but  I,  who  am  asked  as  a  con- 
sequence to  risk  the  greater  part  of  my  capital  on  the 
chance  of  finding  ore  that  is  not  yet  exposed,  and  know- 
ing the  risks  of  mining,  decline  to  go  in  on  such  terms. 
As  a  sound  financier  I  wish  to  insure  my  capital,  and  I 
can  do  so  to  a  great  extent  by  insisting  that  there  shall 
be  ore-reserves  for  considerably  more  than  three  years 
ahead.  I  know  that  this  is  not  the  most  economical  way 
of.  handling  the  mine,  and  that  there  is  a  loss  of  interest 
on  the  money  locked  up  in  these  extra  reserves;  but  I 
look  on  this  loss  as  the  price  I  pay  for  insuring  my  capi- 
tal, and  am  satisfied  to  incur  it.  If  my  terms  don't  suit 
you,  I  will  withdraw  from  gold  mining,  and  the  gamblers 
and  charlatans  who  have  in  the  past  made  this  industry 
their  hunting  ground  can  return." 

Under  ideal  conditions  of  investment  a  three  years' 
ore-reserve,  as  required  by  Mr.  Hoover,  would  really  be 
enough,  for  the  shares  would  be  capitalized  only  at  such 
a  price  as  to  yield  3.0  per  cent  to  the  investor,  who  would 
then,  on  his  three  years'  reserves,  have  the  respectable 
proportion  of  90  per  cent  of  the  mine's  market  capitaliza- 
tions in  sight  as  net  profit.  But  in  a  mine  that  is  located 
in  a  good  district,  with  big  orebodies,  and  looking  well 
in  the  bottom,  such  a  yield  as  30  per  cent  is  now  impossi- 
ble to  secure.  If  such  a  mine  can  be  bought  into,  to  yield 
15  per  cent,  it  is  as  much  as  the  investor  can  look  for; 
but  more  often  the  yield  of  interest  on  the  price  of  stand- 
ard gold  mines  is  found  to  be  no  more  than  12,  10  or 
even  as  low  as  8  per  cent.  Personally,  I  have  come  to  the 
conclusion  that  the  best  gold  mine  should  return  15  per 
cent  to  an  investor,  of  which  he  must  set  aside  at  least 
half  for  the  redemption  of  his  capital ;  if  the  mine  is  not 


ORE-RESERVES  IN  GOLD  MINES        251 

looking  well  in  depth  the  rate  of  interest  received  ought 
to  be  considerably  more. 

Mr.  Hoover's  second  article  discusses  ore-reserves  in 
their  relation  to  mine  valuation.  He  says,  with  truth, 
that  it  is  rarely  possible  in  the  initial  stage  to  find  a  mine 
with  a  net  profit  in  sight  equal  to  the  price  asked  for  it. 
I  had  said  that  it  is  rarely  possible  to  buy  shares  on  this 
basis  in  a  producing  mine,  and  we  had  both  tried  to  an- 
swer the  question,  What  margin  of  risk  is  it  permissible 
to  take?  Mr.  Hoover  argues  that  this  margin  of  risk 
ought  to  be  determined  differently  for  individual  mines, 
and  gives  most  ingenious  theories  for  arriving  at  this 
unknown  factor — theories  based  on  locality;  geologic 
structures;  the  nature  of  ore-shoots;  width,  length  and 
value  of  the  orebodies — all  of  which  must  be  assessed 
at  their  just  value  and  added  to  the  net  profit  then  in 
sight.  I  had  previously  (in  estimating  the  chances  of  the 
average  sound  gold  mine,  over  and  above  its  present  net 
profit  in  sight)  lumped  all  these  possibilities  together  as 
a  job  lot.  My  formula  is  that  a  share  is  worth  buying  if 
the  net  profit  in  the  mine — assuming  developments  in  the 
bottom  are  normal  as  to  width  and  value — is  equal  to  two- 
thirds  of  the  market  price  of  the  mine.  That  means  that 
I  expect  enough  additional  ore  will  be  exposed  in  depth  to 
at  least  return  the  one-third  of  the  capital  which  is  un- 
guarded, and  also  pay  a  good  interest  on  the  whole  of  the 
capital  at  stake.  This  generalization  of  mines  strikes  Mr. 
Hoover  as  somewhat  crude.  But  let  me  point  out  that  it 
was  written  for  laymen.  The  average  investor,  so  far  as 
I  can  see,  has  no  standard  to  guide  him,  and  is  liable  to 
flounder  most  hopelessly  when  he  buys  mining  shares. 
The  mere  putting  into  operation  of  this  bit  of  advice,  and 
thereby  reducing  mine  capitalizations  to  one-third  more 
than  the  net  value  of  the  current  ore-reserves,  would  alter 
the  status  of  mining  investments  out  of  all  recognition.  In 
other  words,  to  produce  a  paradox  on  one  of  Mr. 


252          THE  ECONOMICS  OF  MINING 

Hoover's  favorite  expressions — amortization  would  set  in, 
and  the  investing  body,  instead  of  dying,  would  be  on  the 
high  road  to  recovery.  _ 

London,  July  20,  1904. 


THE    PERSONAL    EQUATION 

(Editorial,   August   18,    1904.) 

The  repeated  insistence  in  these  columns  of  the  impor- 
tance to  the  mining  industry  of  the  sense  of  professional 
responsibility  among  the  chiefs  who  direct  the  operations 
of  mines,  mills  and  smelters,  will  have  failed  utterly  if  it 
has  not  brought  out  the  great  underlying  fact  that  per- 
sonal character  is  the  pilot  who  steers  an  undeviating 
course  amid  the  shoals  of  pliant  circumstance.  Character 
means  that  a  man  will  do  the  same  thing  even  under  dif- 
fering conditions ;  he  is  wanting  in  individuality  who  mod- 
ifies his  action  according  to  temper  and  environment.  It 
is  the  one  element  which  gives  each  man  an  identity 
among  his  fellows.  Each  is  a  law  unto  himself  if  he  pos- 
sesses character ;  but  a  concrete  mob,  if  he  does  not. 

Given  the  same  data,  the  conclusions  formed  by  differ- 
ent engineers  will  vary,  by  reason  of  the  introduction  of 
that  decisive  element  which  represents  the  personality  of 
the  man  who  weighs  them,  balances  them,  and  decides 
their  relative  bearing  upon  the  work  in  hand.  The  per- 
sonal equation  is  the  application  of  character  to  practice. 
While  the  equation  includes  an  unknown  term,  that  term 
is  supposed  to  have  a  fixed  value;  otherwise  it  makes  a 
sum  too  difficult  for  the  business  of  life,  which  has  no  time 
for  complexities.  The  expression  of  the  personal  equa- 
tion is  judgment,  that  indefinable  quality  of  mind  which 
enables  a  man  to  focus  the  experience  of  a  lifetime  upon 
the  work  in  hand  and  gives  advice  which,  in  all  human 
probability,  represents  the  best  solution  of  the  problem 
set  before  him.  In  this  effort,  training  is  a  factor,  in  se- 
lecting the  experience  which  throws  the  best  light  on  each 
separate  case,  and  in  establishing  the  logical  bearing  of 
various  kinds  of  knowledge  upon  the  special  circum- 
stances to  be  studied. 

When  two  or  more  individuals  co-operate,  various  per- 


254  THE  ECONOMICS  OF  MINING 

sonal  equations  of  unlike  terms  are  combined  and  the 
result  can  no  longer  be  expressed  definitely.  Character 
is  obliterated ;  a  crystalline  individual  become  an  amor- 
phous aggregate.  You  cannot  syndicate  character. 


ORE-RESERVES 

(August  1 8,   1904.) 

The  Editor: 

SIR — I  may  be  pardoned  for  returning  to  the  charge, 
as  the  matter  has  proved  of  some  interest. 

In  the  JOURNAL  of  April  21,  Mr.  Lawrence  seems  to 
object  to  the  use  of  the  word  'amortization,'  and  before 
his  onslaught  I  hasten  to  entrench  myself  behind  prece- 
dent. My  assistant,  at  my  request,  has  scanned  the  pages 
of  two  well-known  standard  works  on  mining,  and  finds 
that  the  word  'amortization'  appears  in  those  pages  no 
less  than  162  times.  As  to  the  exact  meaning  of  the  word, 
'Investor/  in  your  issue  of  June  21,  has  truly  explained 
the  origin  of  the  word  and  its  most  proper  use.  I  do  not 
wish,  however,  to  be  taken  as  claiming  amortization  as  a 
common  feature  of  mining  finance.  Amortization,  as 
used  here,  is  a  factor  necessary  to  consider  in  financial 
calculations,  yet  it  is  a  thing  not  often  actually  set  out  of 
dividends.  In  other  words,  the  recovery  of  capital  from 
a  wasting  enterprise  within  a  given  period  is  a  necessary 
factor  in  the  calculation  of  the  pros  and  cons  of  that  en- 
terprise. Having  served  for  the  purpose  of  calculation, 
it  is  quite  immaterial  whether  the  $2  received  from  this 
enterprise  should  be  separated  and  each  stamped  indi- 
vidually— one  as  amortization  and  the  other  as  dividend 
— or  not. 

In  the  JOURNAL  of  March  31,  Mr.  Spilsbury  says:  "In 
the  first  place,  from  my  own  experience,  I  can  safely  say 
that  the  ore-treatment  plant,  whether  milling,  concentrat- 
ing, smelting,  or  other  reduction  means,  of  over  75  per 
cent  of  the  mines  I  have  known,  is  from  initial  erection 
well  in  excess  of  the  output  of  the  mine  under  all  ordinary 
conditions  of  development."  I  sympathize  most  deeply 
with  Mr.  Spilsbury  that  in  75  per  cent  of  his  experience 

See  article  'Amortization/  by  F.  Hobart,  p.  221. 


256  THE  ECONOMICS  OF  MINING 

and  practice  his  lot  has  been  cast  among  mismanaged 
mines.  I  carefully  excluded  this  class  in  founding  my  ar- 
gument, and  I  cannot  accept  the  above  statement  as  any 
refutation  of  my  generalization.  Mr.  Spilsbury  gives  an 
example  of  a  mine  which,  I  observe,  has  the  following 
characteristics : 

1.  Under  ordinary  conditions  of  development,  it  re- 
turns a  fair  profit  and  an  " amortization  fund  of  5  per 
cent." 

2.  With  mine  development  of  a  vigor  which  I  propose, 
I  observe  that  the  hauling  engine  will  not  handle  the 
waste  dirt,  and  that  the  profits  will  all  be  eaten  up  by 
doing  this  increased  development.  ;•; 

3.  I  observe  that,   given  this  development  done,  the 
mine  is  not  likely,  with  its  primary  plant,  to  earn  enough 
profit  to  build  the  secondary  plant. 

4.  Supposing  that  the  secondary  plant  be  built,  the 
profit  derived  from  the  combined  plants  will  possibly  be 
less  than  it  would  from  the  primary  plant. 

The  case  seems  to  me  absolutely  hopeless.  I  must  again 
extend  my  sympathy  to  Mr.  Spilsbury  in  having  a  mine 
of  such  truly  wretched  character,  in  that  the  margin  of 
profit  is  too  narrow  to  stand  such  a  campaign,  and  that 
dispersion  of  the  orebodies  seems  so  great,  and  the  waste 
dirt  is  of  such  enormous  proportions,  that  neither  the 
excavations  for  ore  give  room  enough  to  stow  it  away, 
nor  is  the  hauling  engine  good  enough  to  cope  with  it. 
It  is  a  most  trying  case,  and  I  feel  like  admitting  at  once 
that  this  instance  is  like  those  emanations  of  the  human 
brain  called  nightmares,  entirely  out  of  the  reach  of  sound 
logic.  My  heart  especially  goes  out  to  Mr.  Spilsbury 
when  I  notice  that  in  this  particular  instance  an  amortiza- 
tion fund  of  5  per  cent  is  considered  sufficient,  and  there- 
fore that  the  life  of  this  wretched  mine  is  bound  to  be  at 
least  16  years.  If  Mr.  Spilsbury,  however,  will  give  us 
the  figures  as  to  the  size  of  the  orebodies,  the  distance 


ORE-RESERVES  257 

between  them,  the  profit  per  ton,  the  total  working  costs 
and  the  fixed  charges,  I  will  agree  to  try  to  make  my  plan 
fit  or  show  that  hopes  of  amortization  before  death  should 
be  abandoned. 

For  Mr.  Ingalls'  letter  in  'the  JOURNAL  of  May  5,  and 
Mr.  Brown's  letter  of  May  26,  I  have  to  thank  both  Mr. 
Ingalls  and  Mr.  Brown  for  the  kindly  trouble  they  have 
taken  to  understand  the  points  which  I  desired  to  make 
clear  and  the  support  they  have  given.  I^bow  to  Mr. 
Ingalls'  suggestion  that  in  such  metal  mines  as  have 
a  product  of  variable  price  the  question  may,  in  certain 
conditions,  be  very  much  modified.  Mr.  Brown  has  pre- 
pared a  useful  table,  which  I  trust  Mr.  Spilsbury  will 
avail  himself  of,  as  it  very  much  simplifies  the  application 
of  the  matter  and  might  assist  him  in  his  troublous 
practice. 

As  to  Mr.  Brown's  suggestion  of  the  temptation  of 
superintendents  to  treat  rock  rendered  profitable  by  the 
lowering  of  costs,  due  to  increased  equipment,  and  thus 
lowering  the  average  profit  of  the  mine,  so  as  to  even 
lower  the  total  profit  and  to  upset  the  calculations  on 
which  the  extended  plant  was  authorized,  I  believe  Mr. 
Brown  should  carry  his  argument  somewhat  further — 
although,  aside  from  the  immediate  question,  I  might 
observe  that  superintendents  should  not  yield  to  the 
temptation  to  do  wrong.  If  there  exists  in  a  mine  such  an 
amount  of  ore  of  a  lower  grade  which  can  be  profitably 
worked  by  a  reduction  of  costs,  to  be  secured  by  larger 
equipment,  as  will  affect  the  total  output,  then  this  ore 
forms  a  problem  by  itself,  entirely  aside  from  the  ore 
which  was  within  the  scope  of  the  primary  plant.  Either 
this  secondary  ore  warrants  an  increase  in  equipment  to 
work  it,  upon  its  merits  alone,  or  it  does  not.  If  it  does 
so  warrant,  and  the  primary  ore  also  warrants  an  exten- 
sion of  plant  for  reasons  set  out  in  my  programme,  then 
there  should  be  two  extensions  of  the  plant  and  not  one. 


258  THE  ECONOMICS  OF  MINING 

In  your  issue  of  April  21,  you,  in  effect,  say  that  the 
unashamed  and  essential  American  idea  is  that  it  is  poor 
business  to  mine  for  posterity,  and  I  assume  from  the 
context  that  you  offer  this  as  a  criticism  on  my  plan.  The 
proposal  I  have  laid  down  will,  if  followed,  exhaust  a 
mine  far  more  quickly  than  is  common  in  American  prac- 
tice. It  is  my  belief  that  it  is  possible  to  extend  the  de- 
velopment in  the  average  mine  by  the  depth  to  which  the 
shaft  can  be  sunk,  say  350  to  450  ft.  per  annum,  and  if 
my  plan  were  followed,  mines  would  be  exhausted  with 
this  rapidity.  Instead  of  most  of  the  American  mines 
being  more  than  10  years  old  and  few  of  them  excavated 
to  a  depth  of  1,500  ft.,  they  would,  had  my  plan 
been  followed,  been  excavated  to  a  depth  of  over  3,000 
ft.;  in  fact,  among  the  most  serious  objections  which  I 
see  to  the  proposal  which  I  have  made,  is  not  that  it  works 
the  mines  too  slowly,  but  that  it  works  them  too  fast.  It 
has  been  suggested  to  me  that  from  the  broad  standpoint 
of  public  good  it  will  exhaust  the  mines  too  rapidly.  As 
Mr.  Ingalls  points  out  in — say,  copper  mines — this  pro- 
gramme would  flood  the  market  with  metal. 

In  your  issue  of  April  21  you  raise  the  question  of  the 
occasional  desire  on  the  part  of  a  mine-owner  to  devote 
himself  to  development  work  with  a  view  to  increasing 
his  ore-reserves  and  profit  in  sight  to  a  figure  desirable 
from  the  standpoint  of  sale  of  the  mine.  This,  of  course, 
is  a  matter  of  policy  entirely  outside  the  discussion  of  a 
method  to  get  the  greatest  ultimate  profit  on  the  ore  itself 
— this  involves  the  great  science  of  getting  the  most 
money  out  of  some  other. human  being. 

In  your  issue  of  June  23,  Mr.  Bancroft  raises  an  im- 
portant subject  in  a  discussion  of  the  care  and  nurture  of 
infant  mines.  I  wholly  agree  that  the  problems  which 
surround  the  installation  of  the  primary  plant  may  often 
be  far  different  from  those  of  the  secondary  plant.  Mr. 
Bancroft's  article  I  must  point  out  to  one  critic  as  my 


ORE-RESERVES  259 

justification  for  stating  the  case  in  the  manner  in  which 
I  did — that  the  real  problem  of  ratio  lies  for  its  solution 
in  expansion,  not  in  original  installation. 

If  I  were  going  to  generalize  on  the  subject  of  primary 
plants  I  should  probably  fall  back  upon  the  principle  of  a 
friend  whose  occupation  is  the  operation  of  mines  through 
their  nursery  stages;  that  is,  "In  common  business  pru- 
dence do  not  erect  a  treatment  plant  at  all  until  there  is 
enough  profit  in  sight  to  repay  the  cost  of  it." 

H.  C.  HOOVER. 
Johannesburg,  July  15,  1904. 


NO-LIABILITY   COMPANIES 

(September  8,    1904.) 

The  Editor: 

SIR — In  your  discussion  on  mining  finance  it  may  not 
be  out  of  place  to  consider  the  question  of  the  'no-liability' 
company  as  practiced  in  Australia.  This  system  is  not 
well  known  in  the  United  States,  and  as  it  is  resorted  to 
so  largely  in  a  country  whose  gold  output  was  last  year 
the  largest  in  the  world,  it  is  certainly  worthy  of 
consideration.  The  reason  that  the  'no-liability'  company 
has  such  a  popularity  in  Australia  is  that,  exclusive  of 
Western  Australia,  the  mines  are  opened  and  supported 
almost  entirely  by  local  capital,  the  shares .  being  held 
mostly  in  small  blocks.  Nearly  all  miners,  and  a  large 
proportion  of  the  outside  public,  speculate  in  mining 
shares.  Local  capitalists,  not  being  strong  enough  to 
underwrite  or  finance  large  undertakings,  and  with  a 
desire  to  retain  the  control  of  the  mines  in  the  country, 
the  'no-liability'  company  has  sprung  into  existence,  until 
to-day  it  is  an  inseparable  feature  of  Australian  mining 
practice. 

Previous  to  the  introduction  of  this  class  of  organiza- 
tion the  limited-liability  company  was  the  method  of  flota- 
tion adopted;  but  including,  as  it  did,  among  its  share- 
holders a  great  number  of  miners  and  others  with  limited 
means,  when  a  large  'call'  was  made  at  one  time,  the 
poorer  shareholders  would  often  be  unable  to  meet  it,  and 
cases  have  occurred  where  individuals  have  been  thrown 
into  bankruptcy  on  account  of  their  share  liability.  In 
contrast  to  this,  in  a  liability  company,  a  person  buying 
shares  on  which  only  a  fraction  of  the  nominal  value  has 
been  called  up,  assumes  no  liability  to  meet  any  future 
calls.  He  can  drop  out  any  time  he  sees  fit,  and  in  the 
case  of  non-payment,  usually  after  the  lapse  of  one  month, 
the  shares  are  sold  at  auction  on  the  Stock  Exchange, 
after  notice  of  the  sale  has  been  duly  advertised  in  the 


NO-LIABILITY  COMPANIES  261 

local  papers.  The  no-liability  company  has  been  the 
means  of  producing  a  large  amount  of  gold,  but  it  has 
many  weak  points,  among  the  chief  of  which  is  the  fact 
that  it  increases  the  speculative  element  in  mining  invest- 
ment, and  it  is  the  earnest  desire  of  every  engineer  to  re- 
duce the  speculative  element  in  mining  as  much  as 
possible. 

One  writer  would  have  80  per  cent  of  the  share  value 
of  a  mine  in  sight  as  profit  before  considering  it  a  good 
investment,  and  though  that  is  a  consummation  devoutly 
to  be  wished,  yet  from  the  engineer's  viewpoint  it  is  mani- 
festly asking  too  much.  This  method  would  require  only 
a  sampler  and  an  assayer  to  determine  the  value  of  a 
mine,  but  every  day  the  examining  engineer  is  called  upon 
to  pass  judgment  on  propositions  that  could  not  comply 
with  the  80  per  cent  condition. 

Every  proposition  we  investigate  is  not  a  big  one,  and 
to  condemn  wholesale  all  prospects  we  come  across  would 
require  very  little  of  what  we  may  call  mining  intuition. 
By  prospects  as  here  used,  I  include  properties  from 
which  a  considerable  amount  of  ore  may  have  been  taken, 
but  which  have  little  or  no  ore  in  sight.  This,  then, 
brings  in  the  legitimate  element  of  speculation,  which 
aspect  the  engineer  can  never  separate  from  mining,  and 
with  which  he  must  always  reckon.  In  many  cases  this 
is  quite  large  enough,  without  endangering  the  success 
of  the  enterprise  by  forming  a  no-liability  company,  often 
with  an  entirely  inadequate  capital;  the  amounts  secured 
by  each  separate  call  being  so  small  that  economical 
methods  cannot  be  adopted,  as  the  funds  do  not  allow  of 
any  scope  in  planning  the  work.  I  do  not  for  a  moment 
mean  to  imply  that  all  no-liability  companies  are  crippled 
through  this  sort  of  policy,  because  such  is  not  the  case; 
but  a  great  deal  of  this  hand-to-mouth  policy  does  exist. 

The  philosophy,  then,  of  the  call  system  is  based  on  the 
very  thing  the  engineer  seeks  to  eliminate,  namely,  the 


262  THE  ECONOMICS  OF  MINING 

element  of  speculation.  A  company  is  formed  to  work  a 
property.  Let  us  follow  the  method  pursued  by  a  small 
one  of,  say,  £10,000  nominal  capital  and  £i  shares.  One 
or  two  shillings  may  be  required  with  the  subscription, 
and  then  3d.  per  month  per  share  is  called;  this  brings 
in  £125  per  month.  All  work  will  be  carried  out  in  the 
most  slipshod  manner,  to  make  the  money  go  as  far  as 
possible  at  the  particular  moment,  with  the  hope  that  the 
mine  wilf  soon  be  able  to  pay  its  way.  It  is  true,  many 
people  have  put  money  into  mines  on  this  sort  of  a  basis 
who  would  not  on  any  other,  miners  making  £2  per  week 
owning  and  paying  calls  on  smaH'blocks  of  shares.  These 
small  holdings,  no  doubt,  aggregate  considerable  sums 
and  constitute  an  important  percentage  of  the  total  capi- 
tal invested  in  mines  in  this  part  of  the  world,  and,  too, 
they  materially  support  the  industry;  yet  with  a  proper 
working  capital  in  the  beginning  at  the  disposal  of  a  com- 
petent man,  a  great  deal  more  could  be  done  with  the 
same  cash,  and  therefore  with  the  greater  chance  of 
success. 

Another  great  objection  to  the  no-liability  company  is 
the  ease  with  which  it  lends  itself  to  the  ends  of  the  dis- 
honest company  promoter.  In  the  limited-liability  com- 
pany the  larger  sums  required  are  apt  to  cause  a  closer 
investigation  into  the  merits  of  a  property ;  whereas  in  the 
no-liability  company,  as  the  payments  are  intermittent, 
smaller  and  not  as  much  felt  by  the  investor,  he  is  willing 
to  take  a  bigger  risk,  because,  he  argues,  he  can  drop  out  at 
any  time,  and  he  often  goes  into  a  company  much  as  he 
would  put  up  money  on  a  horse  race.  Once  in,  glowing 
reports  from  the  mine  keep  him  paying  calls,  until  often 
he  has  a  considerable  sum  invested,  and  then  continues, 
because  he  has  already  so  much  at  stake.  Taking  advan- 
tage of  this  weakness  of  human  nature,  the  dishonest 
promoter  gets  one  or  more  exceedingly  favorable  reports 
from  a  certain  class  of  mining  quack  and,  with  these  as  a 


NO-LIABILITY  COMPANIES  263 

basis,  he  solicits  subscriptions.  The  owner  is  to  be  paid, 
perhaps,  a  certain  amount  of  cash,  in  case  of  flotation; 
the  promoter  reserves  for  himself  a  sufficient  number  of 
shares,  issued  as  fully  paid,  and  the  rest  are  offered  to 
the  public.  Naturally,  attempts  are  made  to  create  an 
artificial  value  in  the  shares,  by  issuing  glowing  reports 
from  the  mine,  and  by  whatever  other  means  are  at  hand. 
Once  a  demand  for  shares  is  created,  out  goes  the  pro- 
moter, although,  as  his  shares  are  fully  paid  up,  he  may 
find  it  to  his  advantage  to  hold  on  for  a  considerable 
length  of  time,  as  the  more  money  paid  in  calls,  other 
things  being  equal,  the  more  valuable  his  own  holdings 
become. 

Despite  all  its  handicaps,  the  no-liability  company  con- 
tinues, and  will  continue,  to  exist  in  Australia,  as  it  af- 
fords the  working  miner  and  small  capitalist  an  oppor- 
tunity of  making  a  stake,  and  in  many  other  ways  suits 
the  conditions  of  the  country.  It  must  be  borne  in  mind 
that,  to  a  very  large  extent,  the  ores  are  free  milling,  and 
can  be  treated  in  comparatively  inexpensive  plants,  so 
that,  as  soon  as  the  pay-shoot  is  encountered,  the  property 
can  begin  to  pay  its  way  without  the  necessity  of  having 
to  plan  a  special  metallurgical  plant. 

C.  S.  HERZIG. 

Melbourne,  July  25,  1904. 


ENGINEERS'  ESTIMATES  OF  COSTS 

BY  W.  R.  INGALLS. 

(September  22,  1904.) 

Mr.  Whinery,  in  an  able  paper  in  a  recent  issue  of 
The  Engineering  News,  discusses  the  prevalent  distrust 
of  engineering  estimates ;  he  admits  this  distrust  to  be  not 
without  excuse,  unless  the  estimates  are  reliable.  He 
therefore  analyzes  the  causes  that  seem  to  discredit  the 
more  carefully  prepared  estimates.  Into  every  complete 
estimate  of  the  probable  cost  of  a  projected  engi- 
neering work  the  following  elements  enter:  i,  Quan- 
tity and  character  of  work  to  be  done ;  2,  physical  condi- 
tions under  which  it  must  be  performed;  3,  best  method 
of  execution ;  4,  unit  cost  of  the  various  items ;  5,  general 
expense;  6,  market  fluctuations;  7,  ability  and  skill  of 
execution ;  8,  integrity  and  honesty  in  execution ;  9,  for- 
tuitous incidents;  10,  assumption  that  plan  and  scope  of 
work  will  not  be  altered.  Mr.  Whinery  considers  that 
only  items  I  to  5  are  properly  within  the  scope  of  the 
engineer,  and  argues  that  he  is  no  better  able  to  foresee 
the  contingencies  that  may  arise  under  items  6  to  10 
than  the  man  of  business,  and  therefore  should  disclaim 
responsibility  for  prophecy  concerning  them.  All  of  this 
should  be  distinctly  understood,  however,  and  a  state- 
ment to  accompany  an  estimate,  something  like  the  fol- 
lowing, is  therefore  proposed: 

"The  surveys  and  examinations  for  the  proposed  im- 
provement have  been  made  with  unusual  care  and  thor- 
oughness, and  plans  and  outline  specifications  have  been 
worked  out  and  considered,  with  great  care;  the  quanti- 
ties and  the  character  of  the  work  involved  have  been 
ascertained  as  fully  as  is  practicable  before  the  work  is 
actually  under  construction,  and  we  have  made  liberal 
allowance,  where  any  uncertainty  exists  in  this  respect. 
In  estimating  the  probable  cost  of  the  work  we  have 


ENGINEERS'  ESTIMATES  OF  COSTS     265 

based  our  figures  upon  the  present  market  value  of  ma- 
terials and  labor  in  the  region  where  the  work  is  to  be 
done.  The  unit  prices  applied  to  the  several  kinds  of 
work  are  based  upon  our  personal  knowledge  and  experi- 
ence, supplemented  by  all  the  information  we  have  been1 
able  to  obtain  about  the  cost  of  similar  work,  the  special 
physical  conditions  that  are  likely  to  be  encountered  in 
this  particular  work  having  been  given  full  consideration. 
Under  the  head  of  general  expenses  we  have  added  such 
sums  for  engineering  superintendence,  clerical  work,  and 
interest  and  depreciation  upon  plant  as  in  our  opinion 
should  fully  cover  these  items  of  cost.  The  estimate 
assumes  that  the  work  will  be  conducted  with  the  average 
skill  and  efficiency.  It  makes  no  allowance  for  possible 
changes  in  the  plan  or  scope  of  the  improvement  we  have 
outlined,  nor  for  changes  in  the  market  value  of  material 
and  labor.  No  allowance  is  made  in  the  estimate  for  pos- 
sible improper  or  dishonest  administration;  nor  for  cas- 
ualties and  contingencies  which  cannot  now  be  foreseen, 
but  which,  judging  from  our  experience  on  work  of  simi- 
lar character,  should  not  exceed per  cent  upon  the 

total  we  have  reported." 

I  do  not  agree  with  Mr.  Whinery  that  the  engineer 
is  no  better  able  to  forecast  the  uncertain  contingencies 
than  the  lawyer,  financier  or  man  of  business.  He  should 
know  better  than  they  as  to  the  ranges  in  the  prices  of 
the  labor  and  material  that  he  has  to  do  with,  better  as  to 
the  limits,  ability  and  skill  in  the  execution  of  this  kind 
of  work,  better  as  to  the  general  nature  of  the  fortuitous 
accidents  that  may  happen  and  the  ways  of  guarding 
against  them,  and  better  as  to  the  probable  losses  through 
dishonesty,  because  all  of  that  is  part  of  the  experience 
that  he  has  gained  in  the  execution  of  similar  work.  If 
he  has  not  done  similar  work  he  cannot  be  expected  to 
make  a  trustworthy  estimate ;  but  if  he  has,  he  is  naturally 
better  able  to  forecast  the  chances  than  the  lawyer,  finan- 


266  THE  ECONOMICS  OF  MINING 

cier  or  man  of  business  who  has  had  no  such  experience 
at  all.  In  other  words,  the  modern  engineer  in  order  to 
be  successful  must  necessarily  be  a  man  of  business  him- 
self; and  the  only  ground  for  placing  confidence  in  the 
estimate  of  a  business  man  in  engineering  matters  is 
when  he  is  something  of  an  engineer  himself,  which  in 
fact  many  modern  business  men  are.  I  think  that  no 
blame  will  be  attached  either  to  the  engineer  or  business 
•man  for  a  cost  in  excess  of  estimate  which  is  due  to  a  de- 
falcation of  funds,  or  a  change  in  the  plan  and  scope  of 
the  work  after  the  estimate  was  made,  although  the  en- 
gineer may  even  foresee  the  possible  advisability,  or 
necessity,  for  making  certain  changes  from  the. original 
plans  and  can  also  estimate  in  advance  their  probable 
cost. 

I  think  that  Mr.  Whinery  rather  hedged  from  his 
original  position  when  he  presented  his  proposed  ex- 
planatory note  to  accompany  an  estimate,  which  is  in  my 
opinion  fairly  well  expressed,  except  it  does  not  go  quite 
far  enough,  because  the  engineers  can  say: 

"We  have  based  our  figures  upon  the  present  market 
value  of  materials  and  labor  in  the  region  where  the  work 
is  to  be  done.  These  values  are  —  per  cent  above  (or 
below)  the  average  of  the  previous  5  (or  10)  years.  The 
general  trend  of  the  market  has  recently  been  upward 
(or  downward).  The  proportion  of  labor  in  the  total 
estimate  of  cost  is  —  per  cent;  of  materials,  —  per 
cent,  etc." 

One  of  the  questions  that  is  frequently  asked  the  en- 
gineer is,  What  would  be  the  effect  of  a  reduction  in  the 
prices  for  labor  and  material  ?  Plans  and  estimates  for  a 
certain  work  have  been  prepared.  The  work  has  been 
deferred.  A  year  later,  the  engineer  is  asked  what  will 
be  the  cost  of  the  work  then.  A  large  work,  to  run 
through  a  series  of  years,  is  to  be  undertaken.  The 
prices  for  labor  and  material  are  bound  to  change  during 


ENGINEERS'  ESTIMATES  OF  COSTS     267 

that  period.  At  the  beginning  they  may  be  at  the  lowest 
on  record,  close  to  bed-rock,  with  every  prospect  of  an 
upward  trend  in  the  markets.  The  engineer  should  know 
this;  it  is  his  business  to  know  it;  and  if  he  bases  an 
estimate  on  the  minimum  prices  he  is  as  much  to  blame 
as  if  he  were  at  error  in  his  quantities. 

Mr.  Whinery's  suggestion  to  distinguish  clearly  be- 
tween the  more  and  the  less  certain  parts  of  an  estimate  is 
praiseworthy.  It  is  analogous  to  the  discrimination  of 
'positive  ore/  'probable  ore'  and  'possible  ore'  by  the  en- 
gineer valuing  a  mine.  Either  in  estimating  the  cost 
of  a  works  or  the  value  of  a  mine,  it  is  the  engineer's  busi- 
ness to  express  an  expert  opinion ;  and  in  rendering  only 
a  partial  opinion,  leaving  someone  else  to  draw  the  final 
conclusion  in  order  to  shield  himself  from  responsibility, 
he  is  derelict  in  his  duty.  A  deliberate  overstimate  is  as 
reprehensible  as  an  underestimate.  The  commercial  pur- 
pose of  an  engineer's  estimate  is  not  merely  to  indicate 
how  much  money  is  going  to  be  required,  but  also  to 
serve  as  a  basis  for  calculation  of  the  probable  return 
on  the  money. 

There  are  plenty  of  engineers  in  practice  who  are  able 
to  estimate  closely  what  work  will  actually  cost,  as  proved 
by  experience.  They  command  large  fees,  and  properly, 
for  their  work  involves  technical  and  business  knowledge 
of  the  highest  order.  The  financier  should  see  that  he  gets 
this  kind  of  engineer,  and  when  he  is  sure  that  he  has,  he 
should  be  careful  not  to  obtrude  his  own  less  expert  knowl- 
edge. Fair  industrial  projects  are  not  infrequently  re- 
jected as  not  good  enough,  because  a  sound  engineering 
estimate  of  cost  is  increased  25  per  cent,  33  1-3  per  cent, 
or  more  "on  general  principles"  by  the  business  man 
whose  previous  experience  has  been  gained  at  the  ex- 
pense of  defective  engineering  advice." 


GOLD  DREDGING  IN  CALIFORNIA 

BY  CHAS.  G.  YALE. 

(September  15,  1904.) 

The  following  data  relative  to  costs  of  a  dredge  operat- 
ing at  Oroville,  Cal.,  are  the  averages  covering  three 
years'  work,  and  are  taken  from  the  books  of  a  company : 

Size  of  buckets,  5  cu.  ft. ;  average  speed  of  buckets,  12 
per  minute;  average  bank  measure  per  month,  46,032 
cu.  yd. ;  average  hours  running  per  month,  535 ;  average 
kw.  hours  per  month,  23,995 ;  average  cost  of  power  per 
month,  $359.93 ;  average  cost  of  oil,  grease  and  sundries, 
$13.29;  average  cost  of  repairs,  $1,212.09;  average  office 
and  general  expenses,  $177.40;  average  labor  cost. 
$496.33 ;  average  depth  of  ground,  26  ft. ;  age  of  dredge,  3 
years ;  average  total  cost  of  operating,  4.88c.  per  cu.  yd. 

Taking  the  average  of  the  Oroville  ground  at  i6c.  per 
cu.  yd.  and  writing  off  10  per  cent  for  deterioration  of 
the  dredge,  will  leave  a  net  of  I44C.  per  cu.  yd.  Deduct- 
ing cost  of  operation  of  4.88c.  leaves  a  net  profit  of  9-52C. 
per  cu.  yd.  on  all  the  property  cited,  and  a  net  profit  of 
$52,587  per  annum,  or  over  30  per  cent  interest  on  the 
capital  invested. 

Probably  the  best  showing  that  can  be  made  as  to  low 
costs  is  in  another  instance  at  Oroville,  where  a  monthly 
statement  shows  that  50,760  cu.  yd.  were  dredged,  or  an 
average  of  1,692  cu.  yd.  for  each  working  day,  at  a  total 
cost,  with  all  expenses,  of  3,66c.  per  cu.  yd.  The  average 
yield  of  the  ground  per  cu.  yd.  was  i8.9c.,  and  the  net 
profit  for  the  month  was  $7,744.  This  was  done  with  a 
5-ft.  continuous  bucket  dredge. 


GOLD  DREDGING 

(October  6,  1904.) 

The  Editor: 

SIR — In  your  issue  of  September  15  we  note  an  edi- 
torial giving  costs  of  gold  dredging  at  Oroville.  Having 
recently  had  occasion  to  investigate  this  matter,  we  take 
the  liberty  of  questioning  the  accuracy  of  the  figures 
given. 

The  cost  per  yard,  4.88c.,  is  below  the  general  experi- 
ence of  this  district.  Seven  cents  per  yard  would  be 
much  nearer  the  actual  operating  expense  of  the  5~ft. 
dredges  now  in  use.  The  last  company  to  invade  this 
field,  guided  by  the  previous  results  obtained,  has  al- 
lowed 8c.  per  yard  to  cover  operating  expense  and  depre- 
ciation, the  latter  item  being  estimated  at  about  ic.  per 
yard. 

The  statement  of  23,995  kw.  hours  per  month  is  less 
than  half  of  any  figures  that  have  heretofore  come  to 
light.  Labor  at  $496  per  month  is  also  much  below  the 
best  results  so  far  obtained.  There  are  several  instances 
where  dredges  have  been  operated  for  a  month  or  more 
at  a  cost  of  less  than  4c.  per  yard,  but  estimates  of  costs, 
yardage,  etc.,  from  periods  of  one  month  are  entirely  mis- 
leading. Repair  expenses  range  from  one-quarter  to 
one-half  the  total  cost  of  operations,  and  for  many  months 
they  may  be  comparatively  small.  This,  of  course,  will 
give  a  large  yardage  and  low  monthly  expense.  Conse- 
quently the  cost  per  yard  will  be  much  below  the  normal. 
On  the  other  hand,  a  month  when  much  repairing  and 
renewal  of  dredge  parts  took  place  will  give  a  low  yard- 
age and  a  high  monthly  operating  expense,  giving  costs 
per  yard  much  above  the  average. 

One  dredge  at  Oroville  ran  continuously  for  eight 
months,  making  a  splendid  record,  and  then  shut  down 
39  days  for  repairs.  The  fact,  therefore,  is  obvious  that 


270  THE  ECONOMICS  OF  MINING 

costs  per  yard  are  reliable  only  when  periods  of  a  year  or 
more  are  considered. 

The  present  tendency  is  to  increase  the  size  of  the 
buckets  and  the  strength  of  the  wearing  parts.  This  in- 
creases the  yardage,  with  practically  the  same  labor 
charge,  and  a  less  than  proportional  increase  in  the  ex- 
pense for  power  and  repairs.  It  is  expected  that  the  im- 
proved dredges  capable  of  handling  $80,000  cu.  yd.  and 
upward  per  month  will  reduce  the  costs  to  5c.,  and 
lower,  per  yard,  but  this  cannot  be  done  with  dredges 
having  a  capacity  of  only  46,000  yards  per  month. 
Yours  respectfully, 

STEBBINS  &  SMITH. 

San  Francisco,  September  22,  1904. 

[This  criticism  is  made  fairly  and  with  some  reason. 
We  can  quote  average  costs  and  yield  for  a  well-known 
dredging  company  at  Oroville,  which  has  been  in  opera- 
tion for  5  years.  The  average  cost  for  each  year  has 
ranged  between  4-92C.  and  747c.,  averaging  6c.  for  the 
whole  period;  the  yield  has  averaged  130.  per  yard. — 
EDITOR.! 


MINING  IN  MISSOURI 

(November  3,  1904.) 

The  Editor: 

SIR — In  Missouri  there  are  two  important  mining  dis- 
tricts. The  Joplin  district,  in  the  southwest,  is  the  largest 
producer  of  zinc  in  the  United  States.  The  mines  of  St. 
Francois  county,  in  the  southeast,  rank  that  district  as  the 
second  largest  producer  of  lead.  The  Joplin  district  is 
also  a  considerable  producer  of  lead  from  ore  concen- 
trated, as  a  by-product,  in  the  milling  of  the  zinc  or** 
Such  comparisons  as  are  to  be  made  in  this  letter  are  not 
for  the  purpose  of  pointing  out  the  relative  merits  of  the 
two  districts  as  fields  for  mining  operations,  but  merely 
to  show  in  a  striking  way  the  baneful  results  of  the  labor 
union  policy  as  applied  to  mining.  Everyone  knows  what 
the  results  have  been  in  Colorado,  but — fortunately,  lack- 
ing the  gloomy  record  of  outrage  and  bloodshed — Mis- 
souri presents  the  more  instructive  industrial  picture  of 
"before  and  after,"  which  it  can  show  contemporaneously. 

The  ore  mined  at  Joplin  yields  on  the  average  about 
4.5  per  cent  of  blende,  worth,  say,  $35  per  ton,  under  the 
normal  conditions  of  the  present  time,  and  0.5  per  cent 
galena,  worth,  say,  $50,  or  an  aggregate  of  5  per  cent  of 
mineral  worth  about  $36.50.  The  ore  mined  at  Bonne 
Terre  and  Flat  River  yields  about  5  per  cent  of  galena, 
worth  about  $37.25  per  ton  f.o.b.  mines,  when  lead  is 
at  4c.  St.  Louis.  At  Joplin  there  is  great  and  general 
prosperity.  In  St.  Francois  county  the  mining  companies 
are  struggling  along  at  little  or  no  profit,  hoping  vainly 
for  an  amelioration  in  the  conditions.  It  is  strange  that 
ore  of  the  same  grade  and  value  can  be  worked  profitably 
at  one  place  and  cannot  be  worked  profitably  at 
another  place  in  the  same  State,  especially  when  the 
physical  conditions  are  all  apparently  in  favor  of  the 
unprofitable  mines. 

At  Joplin  there  are  comparatively  small  lenses  of  ore 


272  THE  ECONOMICS  OF  MINING 

and  sheet  deposits,  averaging  only  about  8  ft.  in  thick- 
ness, the  mineralized  ground  being  the  hardest  kind  of 
chert.  The  mines  are  worked  in  a  crude  kind  of  way; 
opened  by  small  shafts,  hoisting  ore  in  small  tubs  by 
means  of  uneconomical  engines,  and  dressing  the  ore  in 
ramshackle  mills  of  comparatively  small  capacity,  the 
entire  cost  of  opening  a  mine  and  equipping  it  with  plant 
to  treat  10  tons  per  hour  being  only  about  $15,000.  At 
Bonne  Terre  and  Flat  River  there  are  immense  shoots  of 
ore,  affording  stopes  of  20  ft.  to  80  ft.  in  height,  and 
width  almost  to  suit;  the  ore  an  easily  mined  dolomite, 
ground  of  character  requiring  no  timbering,  depth  of 
mines  only  slightly  greater  than  at  Joplin,  and  no  greater 
influx  of  water,  except  in  two  or  three  instances ;  the 
mines  opened  by  fine  large  shafts,  equipped  with  nearly 
the  most  modern  facilities;  the  ore  dressed  in  complete 
and  costly  mills  of  500  to  1,500  tons  daily  capacity. 
Surely  St.  Francois  county  has  all  the  advantages  of 
physical  condition,  and  theoretically  ought  to  surpass 
Joplin  in  operating  costs.  The  explanation  of  why  it 
does  not,  involves  some  technical  factors,  but  the  chief 
cause  is  to  be  found  in  the  character  of  the  miners  and 
their  work. 

The  mines  of  St.  Francois  county  used  to  make  money. 
The  minimum  price  of  lead  in  the  history  of  that  metal 
did  not  stop  them,  and  they  have  shown  good  profits 
when  lead  was  considerably  less  than  4C.  per  Ib.  This, 
however,  was  before  the  labor  union  was  organized  in 
the  district. 

The  mines  of  St.  Francois  county  are  operated  by  large 
companies.  The  cost  of  opening  and  equipping  a  mine 
there  is  so  large  that  a  company  with  abundant  capital  is 
required.  For  that  reason  there  is  no  leasing  nor  any  in- 
dividual operations.  The  condition  of  the  miners  was 
good;  they  were  paid  high  wages,  as  compared  with  the 
scale  for  other  trades  in  that  part  of  the  country;  the 


MINING  IN  MISSOURI  273 

day's  work  of  10  hours  was  no  longer  than  was  required 
of  other  artisans;  the  mines  were  sanitary  and  in  no 
way  especially  dangerous;  the  men  were  well  cared  for 
by  the  companies.  The  entire  mining  district  is  pleas- 
antly situated,  far  more  pleasantly  than  the  average. 
The  climate  is  good ;  all  the  conditions  of  living  are 
good.  The  men  were  well  satisfied,  and  a  general  air  of 
prosperity  pervaded  the  entire  district.  This  was  before 
the  diseases  of  unionism  and  socialism  were  contracted. 

In  the  struggle  which  ensued,  the  unions  were  vic- 
torious. The  companies  made  no  fight  in  line,  shoulder 
to  shoulder.  Some  of  them  made  no  fight  at  all,  and  sur- 
rendered without  a  shot.  The  others  fought  alone,  one 
by  one,  and  were  overwhelmed  one  after  the  other.  The 
unions  won  an  increase  in  wages,  a  reduction  in  working 
time  to  8  hours  per  day,  and  the  victor's  right  to  despise 
the  conquered,  which  in  successful  labor  wars  takes  the 
form  of  cheating  the  employer  in  the  work  that  he  pays 
for.  The  amount  of  work  done  per  hour  at  Flat  River 
is  materially  less  than  before  the  advent  of  the  union. 
This  is  the  chief  reason  why  the  mines  of  southeastern 
Missouri  are  not  making  money. 

Joplin  has  never  been  tainted  with  unionism.  It  has 
always  been  the  great  camp  of  the  small  miner.  The  capi- 
tal required  to  open  and  operate  a  mine  there  is  not  large, 
and  the  operators  themselves  to  a  large  extent  take  hold 
and  work  with  their  men.  Every  hired  man  wears  on  his 
head  the  hat  of  a  future  operator.  He  saves  his  money, 
and  sooner  or  later  does  some  prospecting  on  his  own  ac- 
count. If  he  is  lucky,  good  for  him.  If  he  is  unlucky, 
he  goes  back  to  work  until  he  can  save  enough  to  try  it 
again.  Everybody  works  hard — works  hard  every  minute 
of  the  day — and  when  the  day's  work  is  done  he  seeks 
enjoyment  in  such  way  as  most  appeals  to  him.  The  gen- 
eral aspect  of  things  at  Joplin  and  Flat  River  shows  at 
first  sight  that  the  Joplin  man  has  the  more  fun.  The 


274  THE  ECONOMICS  OF  MINING 

man  who  has  done  a  good  square  day's  work  is  better 
calculated  to  enjoy  himself,  anyway,  than  the  man  who 
has  listlessly  loafed  through  his  task.  And  the  Joplin 
men  certainly  work.  A  pair  of  men  break  more  to  the 
drill  in  their  hard,  flinty  ground,  with  no  very  high  breasts 
to  stope  on,  than  the  Flat  River  man  breaks  in  his  mag- 
nificent chambers  in  limestone;  and  when  it  comes  to 
shoveling  and  tramming,  there  is  no  comparison  at  all. 
Nor  has  the  former  any  kind  company  to  provide  him 
with  lavatories  and  lockers,  look  out  for  his  safety,  and 
pay  him  damages  for  unavoidable  accidents.  The  Joplin 
man  simply  takes  his  chances — often  they  are  big  chances 
— puts  in  an  honest  day's  work,  and  gets  on  in  the  world 
if  there  is  anything  in  him  at  all.  But  Joplin  has  no 
union.  Joplin  has  the  best  American  spirit,  and,  conse- 
quently, Joplin  is  prosperous,  and  can  mine  5  per  cent  ore 
with  little  tubs  and  ramshackle  mills,  and  make  money; 
while  the  far  greater  deposits  of  an  equally  valuable  ore 
in  St.  Francois  county  cannot  be  made  to  pay  a  reasonable 
return  on  the  capital  required  to  work  them. 

W.  R.  INGALLS. 
New  York,  October  18,  1904. 


.   SECRET  RESERVES 

(Editorial,  November  24,   1904.) 

London  and  Kalgoorlie  are  perturbed  at  the  present 
time  over  the  right  and  wrong  of  a  practice  which  in  dif- 
ferent forms  is  familiar  to  mine  managers  elsewhere ;  we 
refer  to  the  maintenance  of  a  reserve  intended  to  equalize 
a  variable  output.  This  question  was  discussed  in  our 
issue  of  May  12,  1904,  by  Mr.  F.  H.  Bathurst,  of  the 
Melbourne  Argus;  but  that  well-known  authority  on  min- 
ing matters  dealt  with  the  problem  in  its  more  local  as- 
pects, as  exemplified  by  companies  operating  in  Victoria. 
However,  the  principle  involved  is  the  same.  The  im- 
portance of  it  from  a  financial  standpoint  has  been  em- 
phasized by  the  Boulder  Perseverance  fiasco,  an  inquiry 
into  which  has  elicited  the  fact  that  a  reserve  of  20,000 
oz.  of  gold — say,  $400,000 — was  held  at  the  mine ;  from 
this  store  of  unreported  bullion,  it  was  the  custom  to  take 
three  or  four  thousand  ounces  at  a  time  in  order  to  in- 
crease the  monthly  returns  when  these  fell  off.  In  1903 
the  actual  output  of  the  mine  was  209,206  oz.,  but  the 
output  declared  was  219,923  oz.  In  January,  1904,  the 
actual  output  was  12,426  oz. ;  but  17,471  oz.  was  stated  to 
be  the  production  of  the  mine  for  that  month.  In  the  first 
three  months  the  secret  reserve  of  bullion  was  depleted 
to  the  extent  of  10,000  oz.  During  the  first  six  months 
of  the  current  year  it  became.manifest  that  the  mine  could 
not  maintain  a  rate  of  output  based  upon  a  certain  esti- 
mate of  ore  reserves ;  but  the  gradual  falling  off  was  ob- 
scured by  doctoring  the  returns  in  the  manner  described 
until  finally,  the  secret  reserve  being  exhausted,  the  facts 
had  to  come  out,  and  there  was  a  collapse,  as  injurious  to 
the  professional  men  connected  with  the  management  as 
it  was  distressing  to  shareholders  who  had  bought  stock 
at  a  price  based  upon  a  fictitious  production.  In  the 
course  of  an  official  inquiry,  the  statement  was  made  that 


276  THE  ECONOMICS  OF  MINING 

the  Oroya-Brownhill,  a  great  gold  mine,  thoroughly  well 
managed,  gave  out  monthly  returns  so  uniform  in  their 
amount  that  the  services  of  a  secret  reserve  were  mani- 
fest. It  was  also  stated  that  this  practice  was  usual  in 
Western  Australia. 

Before  proceeding  further,  let  it  be  emphasized  that 
Western  Australia  is  not  the  one  corrupt  spot  in  the  min- 
ing world ;  it  has  had  several  unsavory  scandals,  and  it 
has  been  the  victim  of  a  number  of  unscrupulous  cam- 
paigns, waged  both  on  the  bear  and  the  bull  side  of  the 
market.  This  is  due  not  to  any  inherent  Westralian  de- 
pravity, but,  as  is  obvious  to  men  of  experience,  to  the 
unusual  richness  of  the  orebodies,  a  richness  which  in 
nature  is  concomitant  with  irregularity  of  occurrence. 
As  against  these  troubles,  so  hurtful  to  the  advance  of 
mining  as  a  legitimate  business,  must  be  placed  a  big 
credit  for  honest  management,  technical  skill  and  unre- 
mitting energy,  on  the  part  of  a  handful  of  technical  men, 
both  English  and  American,  without  whom  the  Westra- 
lian mining  companies  would  have  been  in  a  bad  way 
indeed.  In  brief,  human  nature  being  the  same  the  world 
over,  mines  characterized  by  rich  and  erratic  orebodies 
afford  the  maximum  of  temptation  to  wrong-doing. 

A  fluctuating  output  and  a  secret  reserve  represent  a 
state  of  equilibrium  comparable  to  a  powder  magazine 
enclosing  a  small  boy  armed  with  fireworks.  We  are 
aware  that  the  gold  is  not  necessarily  held  in  a  vault;  it 
is  the  custom  to  realize  upon  it  and  to  carry  a  balance  at 
the  bank,  transfers  from  which  effect  the  purpose  of  reg- 
ulating the  returns  as  reported ;  but  even  though  burglary 
of  bullion  is  not  involved,  a  theft  no  less  vital  is  always 
on  the  cards — the  loss  of  one  man's  reputation  or  an- 
other's property  as  expressed  in  share  values.  Take  the 
case  in  point;  the  absentee  manager  of  the  Boulder  Per- 
severance has  had  to  suffer  from  statements  of  output 
which — explain  it  as  you  will — were  false.  To  go  fur- 


SECRET  RESERVES  277 

ther,  the  management  of  the  Oroya-Brownhill  is,  we  be- 
lieve, operating  that  mine  with  a  view  to  serving  existing 
shareholders ;  and  if  a  reserve  is  kept,  it  is  for  the  pur- 
pose of  avoiding  such  fluctuations  as  render  shareholders 
anxious.  It  is  more  than  likely,  however,  that  in  this 
case  the  possession  of  certain  stopes  of  extraordinary 
richness  renders  it  unnecessary  to  store  bullion  in  the 
safe  or  to  carry  a  corresponding  balance  at  the  banker's. 
In  any  case,  a  remedy  for  variation  in  the  yield  can  be 
secured  by  methods  less  dangerous.  In  these  company 
matters,  publicity  is  the  best  preventative  of  wrong ;  secrecy 
is  its  incubator.  State  your  output,  whatever  it  may  be ; 
if  you  have  a  block  of  ground  unusually  rich,  say  so;  if 
you  carry  a  reserve  of  bullion,  state  that  fact ;  publish  the 
amount  of  special  ore  which  may  have  been  stoped  dur- 
ing the  month  or  the  quantity  of  bullion  transferred  from 
the  reserve  in  order  to  sweeten  the  returns.  In  short, 
have  your  reserve,  but  get  rid  of  secrecy;  maintain  a 
steady  output,  but  state  how  it  is  done.  If  not,  cease 
monthly  reports,  which  disturb  timid  shareholders  by  rea- 
son of  their  fluctuation,  and  issue  half-yearly  reports 
with  interim  records  of  progress.  Surely  silence  is  bet- 
ter than  falsehood.  A  policy  of  straightforward  frank- 
ness, accompanied  by  the  fullest  publicity,  is  the  only 
cure  for  the  present  condition  of  affairs  at  Kalgoorlie ;  it 
is  as  necessary  as  fresh  air  to  an  invalid. 


EQUIPMENT  AND  ORE-RESERVES— V. 

(Editorial,  December    i.    1904.) 

The  discussion  on  the  proper  ratio  between  mine 
equipment  and  ore-reserves  is  taken  up  again  in  this  issue 
by  an  engineer  whose  experience  gives  special  value  to 
his  observations.  Previous  contributions  on  this  subject 
have  brought  out  two  points  of  view,  which,  naturally 
enough,  are  held  to  represent  the  opposite  standpoints  of 
financial  surety  and  practical  mining ;  the  one  asks  for  the 
maximum  security  consistent  with  a  reasonable  rate  of 
interest;  the  other  demands  the  largest  gain  in  the  least 
time.  Mr.  Curie's  now  famous  requirement  of  a  60-per- 
cent reserve  represents  the  investment  view;  while  Mr. 
Hoover's  insistence  on  the  increment  of  profit  due  to 
rapidity  of  extraction  expresses  the  intention  to  get  the 
largest  amount  of  money  out  of  a  given  body  of  ore. 
As  a  matter  of  fact,  any  discussion  of  these  differences 
of  opinion  will  continue  to  be  at  cross  purposes  until  it  is 
realized  that  only  one  form  of  ownership  is  contemplated, 
namely,  that  of  a  limited  liability  company,  organized  and 
conducted  under  certain  recognized  conditions.  If  the 
mine  is  owned  by  an  individual  who  has  no  intention  of 
selling  it,  the  problem  is  simplified;  there  is  no  share 
quotation  to  maintain,  no  diversity  of  interests  to  please, 
no  directors  to  educate,  and  no  financial  press  to  consider. 
It  becomes  simply  a  question  of  logical  method,  striving 
to  make  the  most  money  out  of  the  ore  deposit;  the  aim 
will  be  to  avoid  the  wastefulness  of  an  extraction  so  slow 
as  to  allow  ore-reserves  to  remain  underground  unreal- 
ized, while  fixed  charges  consume  small  profits,  or  the 
extravagance  of  an  exploitation  under  which  the  incre- 
ment of  profit  due  to  rapidity  of  extraction  becomes  over- 
whelmed by  the  interest  to  be  paid  on  an  equipment  the 
services  of  which  are  soon  ended  by  the  exhaustion  of 
the  mine.  The  fact  is,  we  do  not  quite  appreciate  how 


EQUIPMENT  AND  ORE-RESERVES       279 

greatly  our  methods  are  dominated  by  the  fluctuating 
ownership  of  mines ;  shareholders  form  a  dissolving  body 
of  proprietors  the  interests  of  whom  are  divergent  ac- 
cording as  they  have  bought  as  investors,  to  hold  indefi- 
nitely, or  as  speculators,  to  sell  on  the  next  rise. 

To  the  investor,  ore-reserves  are  an  insurance;  and, 
even  though  the  opening  up  of  an  excessive  area  of 
ore-bearing  ground  represents  the  expenditure  of  capital 
not  immediately  remunerative,  he  feels  that  the  added 
expense  is  worth  the  additional  security.  The  speculator 
buys  to  hold  for  a  time,  until  he  has  a  reasonable  profit ; 
but  in  any  event  he  does  not  contemplate  retaining  his 
holding  until  the  bitter  end — when  the  mine  is  worked 
out.  To  him  completeness  of  equipment  with  capacity 
to  extract  rapidly,  at  least  as  rapidly  as  the  opening  up  of 
new  ground,  affords  the  results  most  to  his  liking — a 
rising  quotation,  an  increased  dividend,  and  a  proximate 
disposal  of  his  holding  at  an  enhanced  price. 

We  can  illustrate  this  view  of  the  matter  by  quoting 
the  case  of  a  company  which  carries  a  year's  output  in  the 
shape  of  broken  ore ;  apart  from  reserves  in  the  form  of 
blocks  of  ground  not  yet  mined,  there  is  this  big  tonnage 
of  ore  already  mined  lying  in  the  stopes.  From  the  in- 
vestor's standpoint — Mr.  Curie's — this  is  insurance  of  the 
best  kind ;  for  obviously  ore  actually  stoped,  sampled,  and 
assayed  can  be  appraised  with  an  accuracy  not  possible 
when  it  is  in  place  in  the  lode.  As  the  speculating 
shareholder  sees  it — as.  Mr.  Hoover  would  regard  it — 
this  is  just  so  much  money  lying  idle  underground,  on 
which  not  only  is  there  no  interest  forthcoming,  but  it 
requires  a  constant,  though  small,  expenditure  in  the  way 
of  maintenance — that  is,  timbering,  ladderways,  tracks, 
etc.  It  is  here  that  we  disagree  with  Mr.  Curie — sound 
as  his  views  are  on  most  matters  of  mining  finance.  We 
consider  that  mining  cannot  be  safeguarded  to  the  extent 
of  eliminating  risk ;  or,  rather,  we  repudiate  the  idea  that 


280  THE  ECONOMICS  OF  MINING 

by  demanding  a  certain  ratio  of  ore-reserves  and  a  speci- 
fied rate  of  dividend,  you  can  make  a  mining  investment 
as  safe  as  a  railroad  bond.  By  vigorous  development,  by 
accumulating  broken  ore,  and  by  enlarging  the  bins,  you 
decrease  the  uncertainty;  but  the  risk  remains — it  is  the 
essence  of  mining.  Therefore,  the  increased  equipment 
and  the  faster  extraction — with  the  concurrent  advance  of 
development,  a  larger  dividend  and  a  smaller  ore-reserve 
— represent  the  soundest  kind  of  mining.  Under  com- 
pany management,  that  rate  of  extraction  in  which,  as 
Mr.  Hoover  claims,  the  increment  of  profit  due  to  en- 
larged equipment  balances  the  amortization  of  the  addi- 
tional capital  invested  in  the  equipment,  gives  the  fluctu- 
ating ownership  the  best  return.  If  this  is  accompanied 
by  accurate  periodical  estimates  of  reserves,  by  a  frank  and 
frequent  record  of  progress,  and  by  a  management  which 
does  not  buy  or  sell  the  shares  of  the  mine  under  its  di- 
rection, there  is  achieved  the  most  profitable  form  of  busi- 
ness known  to  the  modern  world. 


SECRET   RESERVES 

(December    i,    1904.) 

In  regard  to  this'  matter,  which  was  discussed  in  our 
editorial  columns  last  week,  it  is  interesting  to  note  the 
views  of  four  leading  mine  managers  at  Kalgoorlie, 
as  elicited  by  a  Royal  Commmission  which  is  probing  the 
Boulder  Perseverance  scandal. 

In  course  of  his  evidence,  Mr.  Richard  Hamilton,  man- 
ager of  the  Great  Boulder  Proprietary,  deposed  on  oath : 
"It  is  the  custom  of  most  of  the  mines  here  to  have  a  bul- 
lion reserve.  I  think  it  is  very  advisable  to  have  one  to 
keep  the  returns  even ;  it  prevents  fluctuations  in  the  mar- 
ket, and  enables  you  to  work  the  mine  cheaper.  If  you 
had  to  keep  the  returns  even  by  taking  the  ore  out  of  the 
mine,  you  would  not  be  able  to  do  straightforward  stop- 
ing.  The  amount  of  the  bullion  reserve  should  depend 
upon  the  character  of  the  mine,  but  half  a  month's  return 
would  be  a  fair  thing.  Our  reserve  is  kept  locally.  If 
you  did  not  keep  a  reserve  you  might  have  a  25  per  cent 
or  30  per  cent  variation ;  such  a  fluctuation  would  affect 
the  market  probably  to  the  detriment  of  the  shareholders. 
I  am  in  favor  of  limiting  the  reserve  to  half  the  month's 
output.  The  bullion  reserve  does  not  show  in  the  yearly 
balance-sheet  in  every  case;  the  control  of  the  bullion 
reserve  is  generally  left  to  the  manager.  I  have  not  had 
any  definite  instructions  to  keep  up  a  normal  output.  The 
directors  do  not  always  know  of  the  bullion  reserve.  The 
Chamber  of  Mines  has  recommended  that  bullion  re- 
serves be  kept,  but  with  no  limitations  as  to  the  amount. 
I  am  in  favor  of  giving  every  opportunity  to  shareholders 
of  acquiring  information  about  the  mines;  I  would  not 
let  them  know  what  the  bullion  reserve  was.  I  think  de- 
velopments should  be  announced  here  simultaneously  with 
London ;  I  would  also  give  publicity  to  the  assay  plans, 
and  would  withhold  nothing  but  the  bullion  reserve.  I  do 


282  THE  ECONOMICS  OF  MINING 

not  see  that  it  is  necessary  to  have  local  directors;  those 
who  subscribe  the  capital  naturally  want  control  of  the 
mine.  There  does  not  seem  to  be  a  very  large  body  of 
investors  in  Western  Australia;  Westralia  would  derive 
greater  benefit  by  having  the  mine  offices  where  the  capi- 
tal is  available.  I  do  not  think  you  require  any  more  legis- 
lation than  you  have  at  present  to  prevent  mining  scan- 
dals; Royal  commissions,  such  as  the  present,  would  act 
as  a  greater  deterrent  than  in  enacting  fresh  legislation." 
Mr.  Hamilton  gave  a  description  of  his  sampling  meth- 
ods, saying  he  generally  took  samples  not  more  than  10 
ft.  apart. 

Mr.  Robert  B.  Nicholson,  the  manager  of  the  Ivanhoe, 
in  the  course  of  his  statement,  said :  "I  am  in  favor  of  a 
bullion  reserve.  In  a  mine  like  the  Ivanhoe  it  is  quite  possi- 
ble to  have  a  variation  of  25  per  cent  in  the  output,  and, 
that  would  be  detrimental  to  investing  shareholders.  In 
a  mine  like  the  Ivanhoe,  where  we  get  slides,  the  fluctua- 
tions are  considerable.  I  think  75  per  cent  of  the  month's 
output  is  a  fair  thing  for  a  bullion  reserve.  The  directors 
know  exactly  what  the  output  is ;  it  is  not  desirable  to  let 
the  shareholders  know  the  actual  figures.  The  bullion 
reserve  is  merely  to  regulate  the  monthly  output.  Two 
of  the  officials  on  the  mine  beside  myself  know  what  the 
reserve  is.  The  holding  of  the  reserve  makes  the  costs  of 
mining  cheaper;  for  instance,  you  would  leave  a  lot  of 
low-grade  stuff  behind  you  if  you  had  no  bullion  reserve 
to  work  on."  Mr.  Nicholson,  in  describing  the  sampling 
practice  on  his  mine,  said  he  took  assays  every  3  ft.,  cut- 
ting everything  above  5  oz.  down  to  that  figure  in  calcu- 
lating averages.  He  continued :  "I  think  the  public  gen- 
erally should  have  access  to  the  mine.  They  have  access  to 
the  Ivanhoe ;  we  will  show  them  the  assay  plans  up  to  the 
date  they  are  received  in  London ;  we  publish  all  informa- 
tion here  simultaneously  with  London.  I  do  not  think  it 
would  be  wise  to  legislate  that  ore-reserves  should  only 


SECRET  RESERVES  283 

be  those  opened  up  on  three  sides ;  it  should  be  left  to  the 
discretion  of  the  manager.  What  is  really  wanted  is  the 
publishing  here  of  the  fortnightly  reports,  giving  widths 
and  values ;  we  do  it  on  the  Ivanhoe." 

Mr.  Frank  A.  Moss,  general  manager  of  the  Kalgurli 
and  Hainault,  deposed :  "The  Kalgurli  differs  from  most 
mines  on  the  field.  We  have  very  big  lodes,  but  no 
definite  line  of  lode,  and  unless  we  had  a  bullion  reserve 
we  would  have  a  bad  time."  (Witness  produced  a  plan 
showing  a  stope  190  ft.  long  and  132  ft.  wide,  and  ex- 
plained to  the  Commission  that  in  working  such  a  big  ore- 
body  it  was  impossible  to  maintain  an  even  return.)  "In 
January  our  output  was  5,800  oz. ;  probably  six  months 
later  it  would  be  2,800  oz.  Still,  our  shares  never  fluc- 
tuate, and  that  is  due  to  the  use  of  a  bullion  reserve;  a 
month's  bullion  reserve  is  quite  sufficient  for  us  to  main- 
tain an  even  output.  We  do  not  expose  ore  on  three  sides 
in  our  mine ;  we  go  by  what  we  have  taken  out.  Supposing 
we  take  20,000  tons  out  from  20  ft.  in  height,  and  it  goes 
17  dwt,  we  reckon  the  next  20  ft.  should  be  something 
the  same.  No  hard-and-fast  rule  as  regards  estimating 
ore-reserves  would  apply  to  the  Kalgurlie.  We  have  a 
stope  65  ft.  wide  at  640  ft.,  and  at  700  ft.  it  is  5  ft.  wide ; 
80  ft.  south  of  that  it  is  80  ft.  wide  at  the  700  ft.  My  es- 
timates, so  far,  have  worked  out  correctly.  If  any  per- 
sons wanted  to  sample  the  Kalgurli  it  would  take  them 
1 2 -months;  they  would  have  to  shoot  the  stopes  out  to 
do  it.  In  the  Kalgurli  I  would  not  take  samples  even  in 
5-ft.  sections;  for  instance,  in  one  face  we  may  be  on 
lo-dwt.  ore,  and  the  next  cut  might  give  us  5  oz.  My 
instructions  are  that  the  mine  plans,  assays,  etc.,  are  to  be 
open  to  the  public." 

Mr.  George  M.  Roberts,  manager  of  the  Associated 
Northern  Blocks,  deposed :  "I  think  it  is  essential  to  have 
a  bullion  reserve  equal  to  half  the  month's  output ;  values 
in  these  mines  are  very  erratic ;  in  the  event  of  legislation 


284  THE  ECONOMICS  OF  MINING 

I  would*  say  a  month's  reserve.  There  are  about  200  ft. 
of  country  in  our  mine,  ore-bearing,  carrying  lenses  of 
ore;  face  samples  are  very  misleading  in  our  case,  and  it 
is  a  difficult  mine  to  reckon  up  the  ore  reserves.  I  would 
not  make  even  a  preliminary  report  on  samples  taken  50 
ft.  apart;  it  would  be  useless.  I  would  like  to  sample 
at  least  every  10  ft.,  and  then  compare  my  results  with 
the  mine  assays ;  if  I  were  buying  a  mine  I  would  sample 
every  5  ft.  I  am  in  favor  of  a  mine  being  worked  openly ; 
our  mine  has  been  open  to  the  public  ever  since  I  took 
charge.  I  consider  the  keeping  of  a  bullion  reserve  as- 
sists us  in  cheap  mining." 


MINE  EQUIPMENT  AND  ORE-RESERVES 

(December    i,    1904.) 

The  Editor: 

SIR — If  a  few  words,  rather  late  in  the  day,  can  be 
granted  me,  I  would  like  to  submit  a  consideration  of  the 
difference  between  the  policy  advocated  by  Mr.  Hoover 
and  that  urged  by  Mr.  Curie.  This  difference  is  partly 
fundamental,  and,  in  part,  one  of  premises.  Mr.  Hoover 
says :  "It  will  be  granted  that  the  true  objective  of  min- 
ing is  to  gain  the  greatest  profit  from  a  given  body  of 
ore."  Mr.  Curie,  using  mining  as  a  generic  term,  em- 
bracing finance  as  well  as  practical  management,  answers 
"that  the  greatest  technical  economy  is  one  thing  and 
financial  security  another,  that  high-pressure  development 
and  the  economic  limit  of  reserves,  while  satisfying  the 
one,  are  in  contravention  of  basal  principles  of  the  other," 
and  further,  that  capital  being  the  first  essential  of  opera- 
tions, "those  who  pay  the  piper  must  call  the  tune." 

This  assumption  of  the  opposition  of  practical  mining 
and  finance  is  so  much  of  a  facer  for  those  engineers 
who  are  trying  to  reach  the  most  economical  basis  of 
operations  that  it  is  worth  our  while  to  examine  the  mat- 
ter with  some  closeness. 

There  is  no  dispute  in  this  case  about  the  economy  to 
be  effected  by  Mr.  Hoover's  policy  of  forced  development 
and  unit-plant  additions.  The  financial  argument  against 
it  is  that,  while  increasing  profits,  it  decreases  ore-re- 
serves, and  tends  to  keep  them  at  about  a  three  years' 
limit.  The  investor  looks  upon  ore-reserves  as  the  secur- 
ity for  his  investment,  and  feels  that  he  has  little  enough 
of  that  if  he  allows  two-fifths  of  his  capital  (Mr.  Curie's 
ratio)  to  stand  without  that  security.  In  other  words, 
under. normal  conditions  of  bottom  development  he  asks 
that  for  every  $100  of  stock  valuation  there  should  be 
$60  of  actual  profit  in  reserve ;  then,  if  the  mine  be  paying 


286  THE  ECONOMICS  OF  MINING 

10  per  cent  on  that  valuation,  there  would  be  six  years' 
dividends  assured  in  the  reserves. 

The  addition  of  further  treatment  units  may,  through 
the  increment  of  profits,  increase  the  net  value  of  the  re- 
serves by  20  per  cent  and  the  annual  dividends  by  100 
per  cent.  The  increased  dividend  rate,  moreover,  has 
the  effect  of  raising  the  stock  valuation  as  well,  by  per- 
haps 100  per  cent,  while  the  ore-reserves,  in  point  of 
time,  are  diminished  by  half.  I  think  this  states  the  ar- 
gument fairly. 

For  the  original  investors,  those  who  bought  on  the 
$100  basis,  on  which  the  property  was  paying  its  10  per 
cent  dividend,  there  seems  to  be  no  question  that  the  sec- 
ondary equipment  has  been  a  financial  gain,  regardless 
of  the  increased  stock  valuation,  and  it  is  hard  to  see 
what  in  the  condition  of  the  mine  should  tempt  them  to 
sell  even  at  the  enhanced  price;  by  so  doing  they  would 
be  sacrificing  a  high-return  investment,  and  one  that 
actually  exceeded  the  three-fifths  profit  in  ore-reserves, 
and  could  scarcely  hope  to  reinvest  their  increased  capital 
on  as  good  terms  as  that.  This  in  itself  would  tend  to 
strengthen  the  investment  view  of  mines,  and  weaken 
the  speculative. 

It  may  be  granted,  however,  that  some  would  sell,  and 
the  new  holders  would  have  a  10  per  cent  investment,  as 
the  original  holders  had,  but  through  the  short  life  of  the 
mine  they  might,  by  failure  of  subsequent  development, 
lose  part  of  their  capital.  The  question  is  whether  this 
ought  to  be  considered  in  deciding  on  the  secondary 
plant  Should  the  present  stockholders  be  sacrificed  in 
pocket  because  of  some  possible  people  who  may  buy  the 
shares  later? 

Stated  in  this  way,  the  question  implies  its  answer,  and 
I  can  see  no  reason  why  either  the  management  or  the 
directory,  who  are  expressly  chosen  by  the  present  stock- 
holders to  look  after  their  interests,  should  have  any- 


EQUIPMENT  AND  ORE-RESERVES       287 

doubts  in  the  matter.  We  may  all  be  sorry  for  excitable 
and  short-sighted  investors,  and  look  forward  to  the  time 
when  a  clearer  view  of  what  constitutes  value  in  a  mine 
will  obtain — may  even  exert  ourselves,  as  Mr.  Curie  so 
successfully  has  done,  to  bring  the  time  nearer ;  but  this 
is  entirely  irrespective  of  present  policy.  In  short,  it 
seems  to  me  absurd  to  hesitate  about  lighting  a  fire  in 
A's  stove  because  B  may  burn  his  fingers  at  it ;  rather  the 
clear-seeing  economist  should  argue  that  some  time  B 
must  learn  all  about  fires,  and  the  sooner  he  is  scotched 
the  sooner  will  he  become  enlightened. 

Perhaps  Mr.  Curie  would  argue  the  hopelessness  of 
expecting  people  to  sell  a  share  yielding  an  annual  $20  for 
$100,  even  though,  on  Mr.  Curie's  basis,  it  lacks  security. 
This  may  be  true,  but  does  not  this  simply  indicate  that 
the  layman  does  not  accept  that  formula  of  chances  ? 
In  the  absence  of  the  geological  and  historical  data 
that  would  give  the  best  evidence  obtainable  of  the  future 
of  the  mine,  or,  perhaps,  because  of  inability  to  under- 
stand them,  he  believes  he  can  have  no  safer  guide  than 
his  experience  in  other  investments,  and,  according  to 
what  that  has  been,  he  capitalizes  the  particular  profit. 
This  is  not  saying  that,  as  an  expression  of  averages,  Mr. 
Curie's  formula  is  not  sound;  we  are  considering  it  as 
applicable  to  particular  cases,  and  for  such,  statements 
of  averages  are  of  doubtful  value — one  cannot  predicate 
a  man's  height  from  the  mean  of  the  human  race. 

In  conclusion,  may  I  be  allowed  to  point  out  that  the 
term  'insurance'  is  not  safely  applied  to  what  security  may 
be  obtained  from  large  ore-reserves,  as  distinct  from 
'economic'  ones.  Insurance  is  a  definite  security  for 
which  a  definite  premium  is  paid ;  in  this  case,  the  secur- 
ity is  indeterminate  and  the  premium  depends  upon  the 
increment  of  profit,  which  is  the  sum  actually  sacrificed 
for  the  security  by  insisting  upon  the  two-thirds  rule. 
This  varies  from  dollars  to  thousands ;  but,  whatever  it 


288  THE  ECONOMICS  OF  MINING 

may  be,  it  is  an  unknown  quantity  unless  the  investor  is 
awake  to  the  function  of  'fixed  charges'  and  understands 
the  'increment  of  profits/  When  this  degree  of  knowl- 
edge has  been  reached,  it  is  not  a  far  step  to  a  technical 
view  of  the  real  prospects  of  a  mine  as  distinct  from  the 
average  view,  and  knowledge  on  this  point  removes  the 
need  for  the  use  of  the  two-thirds  rule. 

What  I  have  wished  particularly  to  make  clear  is  that 
the  two-thirds  rule  with  its  consequences  does  not  tend 
to  a  rational  treatment  of  mining  investments ;  that  it  does 
not  of  necessity  make  for  the  less  speculative  view  of  the 
industry;  that  it  does  not  even  invite  the  best  class  of 
investors,  those  who  will  try  to  understand  the  needs  of 
the  business.  R  GlLMAN  BROWN. 

Bodie,  Cal.,  November  9,  1904. 


GOLD    DREDGING    AT   OROVILLE 

BY  HOWARD  D.  SMITH  AND  ELWYN  W.  STEBBINS. 

(December    8,    1904.) 

The  growth  of  the  gold-dredging  industry  of  Califor- 
nia has  given  it  a  leading  place  among  the  mining  activi- 
ties of  the  State,  and  there  is  every  indication  of  a  further 
increase  in  its  importance.  The  most  extensive  operations 
have  been  carried  on  at  Oroville,  where,  of  the  28  bucket- 
line  dredges  so  far  constructed,  27  are  now  in  successful 
operation,  and  the  ground  upon  which  one  dredge  failed 
to  pay  profits  is  at  present  worked  with  good  results  by 
another  company.  Several  dredges  are  in  process  of 
construction,  and  active  prospecting  is  increasing  the 
area  of  proved  and  profitable  dredging  ground. 

The  character  of  the  ground  at  Oroville  is  peculiarly 
favorable  to  dredge  operations.  The  false  bed-rock  is 
comparatively  flat  and  quite  soft,  being  merely  a  bed  of 
volcanic  tuff  overlying  unprofitable  gravel.  Few  boulders 
weighing  over  500  Ib.  are  encountered.  The  gravel  being 
rarely  compacted,  there  is  no  need  for  blasting;  in  the 
present  river  channel  and  adjacent  thereto  the  gravel  is 
loose  and  easily  dredged.  On  some  high  ground,  where 
the  deposit  antedates  that  found  nearer  the  river,  it  has 
been  found  advisable  to  blast  the  bank.  At  the  expense 
of  a  decreased  yardage,  the  hard  gravel  can  still  be  dug 
without  blasting ;  but  the  high  bank,  at  times  20  ft.  above 
the  highest  obtainable  pond-water-level,  makes  it  advis- 
able to  blast,  otherwise  the  undercut  bank  will  cave  in 
large  portions,  so  as  to  endanger  the  bucket-line  and  the 
dredge  itself.  For  blasting,  30  to  40  holes  per  acre  are 
drilled,  usually  only  to  water-level,  each  being  charged 
with  100  to  125  Ib.  of  No.  2  dynamite.  This  increases 
the  yardage  handled  daily,  as  well  as  obviates  danger 
from  the  caving  of  the  bank.  The  extra  expense  of  2.5 


290  THE  ECONOMICS  OF  MINING 

to  30.  per  yd.  proves  to  be  good  practice  under  the  cir- 
cumstances. 

The  gravel  is  of  a  depth  suited  to  dredging,  being  from 
20  to  60  ft.,  with  a  comparatively  even  surface.  For  a 
gravel  deposit,  the  gold  is  evenly  distributed,  ranging, 
in  large  tracts,  from  10  to  35c.  per  yd.  The  whole  On> 
ville  district  probably  averages  about  i6c.  per  yd.  The 
gold  is  all  fine,  screens  with  3/8-in.  holes  being  used. 
Winters  are  mild,  and  no  difficulties  from  freezing  are  en- 
countered. Water  is  conveyed  by  an  excellent  ditch 
system  to  all  parts  of  the  district,  the  expense  averaging 
about  $125  per  month  per  dredge.  Unlimited  electric 
power  is  obtainable  at  i.5c.  per  kw.  hour. 

An  excellent  class  of  labor  can  be  had  at  the  following 
wages : 

CREW  FOR  ONE  DREDGE. 

I  Foreman  at  $5 .  oo  per  day $5 .  oo 

3  Winchmen  "     3.00       " 

3  Oilers  "     2.50      "       

I  Blacksmith  "     3 . 50       "       

1  Helper  "     2.50      "       

2  Chinamen  "     i .  75       " 

Total $31 .00 

In  addition  there  is  a  superintendent,  whose  time  is 
generally  distributed  among  several  dredges.  The  winch- 
men  and  oilers  work  8-hour  shifts,  while  the  blacksmith 
and  helper  work  10  hours.  The  Chinamen  clear  the 
ground  of  brush  and  trees,  'bury  dead  men'1  and  do  gen- 
eral chores. 

Low  costs  are  attainable  largely  by  reason  of  conveni- 
ent communication  with  San  Francisco,  and  the  presence 
of  well-equipped  machine-shops  on  the  spot. 


*Not  in  the  mortuary  sense ;  in  dredging,  'dead  men'  are 
anchors  of  wood  or  metal  to  which  mooring  cables  are  at- 
tached. 


GOLD  DREDGING  AT  OROVILLE          291 

The  ground  is  prospected  by  shafts  or  drill-holes  sunk 
to  bed-rock,  the  gravel  therefrom  being  rocked  or  panned. 
Beside  giving  a  sample  of  the  gravel,  prospect  holes 
should  yield  important  data,  as  to  the  distribution  of  the 
gold,  the  character  of  the  deposit  and  the  nature  of  the 
bed-rock. 

The  gravel  from  successive  lengths  of  a  hole  is  treated 
separately,  and  the  respective  amounts  of  gold  estimated. 
Such  estimates  are  checked  with  the  weight  of  the  gold 
recovered  from  the  entire  boring.  With  practice  this 
estimation  becomes  fairly  accurate.  Shafts  are  preferred 
where  it  is  possible  to  sink  them,  as  they  give  more  com- 
plete and  accurate  information ;  but  if  water  is  present  in 
any  quantity,  they  become  too  expensive,  and  drilling 
must  be  resorted  to.  Owing  to  the  availability  of  Chinese 
labor,  shafts  are  cheaper  to  sink  in  dry  ground  than  drill- 
holes. 

About  one  hole  per  5  or  10  acres  will  serve  to  sample 
a  large  tract ;  but  prospect  holes  are  put  down  much  more 
frequently  in  the  immediate  vicinity  of  the  dredge,  both 
before  construction  and  during  operation.  If  care  is  not 
exercised  in  prospecting  with  drilling  machines,  the 
sample  may  easily  prove  misleading.  Errors  frequently 
occur  from  the  squeezing  of  material  into  the  bottom  of 
the  casing,  thus  giving  a  larger  sample  than  is  called  for 
by  the  size  of  the  hole.  Sliming  and  consequent  loss  of 
gold  will  sometimes  result  when  too  long  a  period  of 
churning  transpires  before  pumping  the  hole.  The  casing 
should  be  kept  driven  below  the  point  of  drilling  when- 
ever possible.  The  practice  is  to  drill  and  pump  the  hole 
in  i -ft.  sections,  the  material  from  each  foot  being  panned 
separately.  Where  great  care  is  required,  sections  of  only 
6  in.  are  drilled  and  pumped  at  a  time.  Frequently  the 
whole  foot  can  be  pumped  with  but  little  drilling.  The 
drill  crew  consists  of  one  man  in  charge,  one  sand-pump 
man,  one  drill-man,  one  fireman  and  one  or  two  laborers. 


292  THE  ECONOMICS  OF  MINING 

The  man  in  charge  should  have  a  knowledge  of  the  prin- 
ciples of  sampling,  for  upon  his  judgment  depends  the 
value  of  the  results  obtained.  He  usually  does  the  panning 
himself.  Where  oil  is  used  for  fuel,  one  man  attends  to 
both  the  sand-pumping  and  firing.  The  cost  of  sampling 
with  churn-drills,  under  favorable  circumstances,  is  $2  to 
$2.50,  with  $3.50  per  foot  as  a  maximum. 

Gold  dredges  are  similar  in  general  type  and  operation ; 
but  details  of  design  are  of  great  importance.  In  fact,  suc- 
cessful dredge-building  depends  upon  working  out  the 
details,  and  a  dredge  properly  built  for  one  locality,  with 
given  conditions,  may  be  totally  unfit  for  another.  If  a 
dredge  is  not  suitably  constructed  for  its  particular  work, 
the  cost  of  repairs  is  certain  to  be  large.  The  importance 
of  this  consideration  is  shown  when  it  is  understood  that 
this  item  of  expense  ranges  from  one-quarter  to  one-half 
the  total  cost  of  operation.  Several  types  have  been  tried, 
but  the  bucket-line  dredge  has  now  superseded  all  others. 
Buckets  with  a  capacity  of  3  cu.  ft.  were  first  used ;  later, 
dredges  were  built  with  5-ft.  buckets,  while  near  Folsom 
a  7-5-ft.  bucket,  has  been  used  with  a  fair  measure  of 
success,  and  a  new  dredge,  of  the  same  capacity,  correct- 
ing the  faults  of  the  first,  is  now  in  process  of  construc- 
tion. Dredges  of  n  and  12-ft.  bucket  capacity  are  used 
In  other  districts,  but  it  is  impossible  to  compare  results 
without  data  covering  all  the  local  conditions.  Two  5~ft. 
bucket  dredges,  built  to  handle  gravel  to  a  depth  of  60  ft. 
below  the  water  level,  are  now  undergoing  the  severe  test 
of  actual  operation  on  the  Yuba  river. 

The  advantages  of  a  large  bucket  are  increased  yard- 
age with  practically  the  same  labor,  the  possibility  of 
handling  bigger  boulders,  a  less  than  proportional  in- 
crease of  power  and  general  expense,  and  probably  a  less 
than  proportional  increase  in  the  cost  of  repairs.  The 
disadvantages  ar^e — a  greater  first  cost,  the  necessity  for 
special  facilities  for  handling  the  heavy  dredge-parts 


GOLD  DREDGING  AT  OROVILLE          293 

when  making  repairs  or  renewals,  and  the  increased  diffi- 
culty of  washing  the  large  and  highly  irregular  amount 
of  material  delivered  by  the  buckets  to  the  screen.  It 
seems  probable  that  the  7.5-ft.,  and  possibly  larger,  bucket 
will  prove  the  most  desirable  under  conditions  existing  at 
Oroville. 

Gold  is  lost  in  several  ways.  A  certain  amount  goes 
off  in  the  tailing  from  the  sluices;  and,  if  the  gravel  is 
not  thoroughly  washed,  the  coarse  material  will  carry 
some  up  the  stacker.  Some  is  left  on  the  bed-rock,  though 
this  amount  should  be  small.  A  slight  loss  occurs  from 
the  material  which  drains  from  the  buckets  into  the  well 
during  their  journey  from  the  bank  to  the  upper  tum- 
blers. Exhaustive  tests  of  the  table-tailing  have  been 
made,  showing  a  very  small  loss,  in  no  case  as  much  as 
2c.  per  yd.  With  good  management  it  is  probable  that 
an  extraction  of  about  90  per  cent  is  obtained.  Both 
cocoa-matting  and  angle-iron  riffles  have  proved  excellent 
devices,  most  of  the  gold  being  caught  directly  under  the 
screens. 

While  it  is  not  advisable  here  to  go  into  the  subject  of 
dredge-building,  it  is  well  to  mention  one  or  two  points. 
The  bucket-line  and  tumblers  are  subject  to  enormous 
strain  and  wear;  their  maintenance  constitutes  the  larger 
part  of  the  repairs.  Any  improvements  which  increase 
the  strength  and  life  of  the  various  wearing  parts,  with- 
out excessive  increase  in  cost,  are  sure  to  be  welcomed. 
The  operators  have  been  constantly  urging  manufactur- 
ers to  make  stronger  machines,  so  that  the  expense  in  lost 
time  and  in  repairs  will  be  diminished.  The  tendency 
toward  increased  strength,  power  and  capacity  is  still  in 
evidence.  The  7-5-ft.  machine,  in  process  of  building  at 
Folsom,  has  bucket-pins  of  6-in.  diam.,  and  other  parts 
in  proportion.  A  capacity  of  110,000  yd.  per  month  is 
expected.  There  is  a  valuable  device  for  increasing  the 
pitch  of  the  tumbler  faces  to  correspond  with  increased 


294  THE  ECONOMICS  OF  MINING 

pitch  of  the  bucket-chain  links,  which  results  from  the 
wearing  of  the  pins.  The  revolving  screen  is  desirable 
for  clayey,  sticky  gravel,  as  it  helps  disintegration  more 
than  the  flat  screen ;  where  ground  is  not  sticky,  however, 
the  flat  screen  is  preferable,  since  it  costs  less,  is  easier  to 
repair  and  renew,  and  uses  less  power.  It  is  important 
that  the  power  which  drives  the  bucket-line  and  that 
which  raises  the  ladder  should  come  from  different  mo- 
tors. There  is  thus  reserve  power  in  case  the  bank  caves, 
so  as  to  cover  the  ladder  and  buckets.  When  dredging 
an  overburden  of  barren  soil,  some  convenient  method  of 
disposing  of  it,  without  passing  it  over  the  tables  and 
fouling  the  riffles,  is  desirable.  For  this,  and  other  pur- 
poses, the  hopper  should  be  made  to  discharge  into  the 
well,  or  to  one  side  of  the  dredge,  when  desired. 

Both  intermittent  and  close-connected  bucket-lines  are 
in  use,  but  the  close-connected  type,  as  a  rule,  finds  more 
favor  among  operators.  It  is  claimed — and  it  is  undoubt- 
edly true — that  the  intermittent  line  can  be  run  faster 
and  that  the  buckets  fill  better ;  but,  as  there  are  only  half 
as  many  buckets  for  the  same  number  of  links,  the  dredg- 
ing capacity  is  less.  An  intermittent  bucket-line  will  han- 
dle larger  boulders  than  a  close-connected  one,  and  it  is 
to  be  preferred  in  some  cases  for  this  reason. 

To  hold  the  boat  against  the  bank  and  move  ahead, 
either  spuds  or  a  head-line  are  used.  Each  method  has 
advantages  and  advocates.  A  little  time  is  lost  in  walking 
ahead  with  spuds,  but  the  labor  of  burying  'dead  men' 
for  the  head-line  and  moving  the  latter  by  hand  along  a 
high  bank  is  obviated;  wider  cuts  can  be  dug,  but  they 
are  ordinarily  of  no  particular  advantage.  Spuds  hold 
the  dredge  steadily  against  the  bank  and  obviate  the  roll- 
ing and  pitching,  which  are  a  disadvantage  when  the 
head-line  is  used.  It  costs  more  to  equip  a  dredge  with 
spuds,  but  they  are  generally  preferred  in  Oroville  when 
dredging  in  ponds.  When  working  in  swiftly  running 


GOLD  DREDGING  AT  OROVILLE 


295 


water,  a  dredge  equipped  with  both  head-line  and  spuds 
would  be  desirable. 

Of  mining  costs  in  general,  and  of  dredging  costs  in 
particular,  it  may  be  said  that  bare  figures,  without  de- 
tails of  the  items  considered  and  of  the  local  conditions, 
convey  no  definite  information  and  are  practically  value- 
less. By  a  little  bookkeeping  dredging  costs  may  be  made 
as  desired.  If  the  figures  included  all  expenses  incurred 
during  the  year,  and  an  amount  for  the  depreciation  of 
the  dredge,  a  much  more  satisfactory  basis  for  compari- 
son would  be  available.  Amortization  of  the  price  of  the 
ground  manifestly  varies  with  each  case  considered,  and 
comparisons  are  useless.  Owing  to  the  slack  methods  of 
measurement  frequently  employed,  the  yardage  quoted 
may  easily  vary  20  per  cent. 

The  following  table  of  costs  applies  to  a  3-5-ft.  close- 
connected,  bucket-line  dredge  working  in  the  high-water 
channel  of  the  Feather  river,  or  adjacent  thereto: 


Bank 
Measure 

Percent- 
age of 
-    time  in 

Cl        V^UU1\~ 

Repair 

al 

ment,  cu. 

opera- 

1 

ind  Sup- 

General 

£% 

1903. 

yd.  dug. 

tion. 

Labor. 

Power. 

plies. 

Expense. 

w 

Dec.. 

35,000 

68.78 

$.0382 

$.0221 

$.0130 

$.0398 

$.1131 

Jan.. 

37,000 

67.61 

.0306 

.0173 

.0276 

.0023 

.0778 

Feb.. 

37,800 

86.16 

.0276 

.0199 

.0114 

.0062 

.0651 

Mar. 

40,500 

65.88 

.0250 

.Ol8l 

.0038 

.0028 

.0497 

Apr1. 

24,680 

42.68 

.0392 

.0170 

.0414 

•  0035 

.1001 

May. 

33,572 

74-33 

.0322 

.0238 

.0370 

.0016 

.0946 

June. 

44,878 

87.76 

.0234 

.0173 

.0239 

.0022 

.0668 

July. 

35,520 

72.44 

.0315 

.0196 

.0280 

.0018 

.0809 

Aug. 

49,340 

84.80 

•0235 

.0131 

•0335 

.0010 

.0711 

Sept. 

34,226 

88  79 

.0305 

.OI90 

.0285 

.0032 

.0812 

Oct.2 

36,000 

88.68 

.0297 

.O229 

.O2O7 

.0319 

.1052 

Nov. 

38,000 

88.43 

.O27O 

.0199 

•0433 

.0026 

.0928 

Dec.. 

38,500 

86.73 

.0285 

•0175 

.0087 

.0017 

.0564 

Aver..   37,309     77.11        .0291 
1  Flood.     2  Taxes  and  insurance. 


.0189         .0241         .0075          .0796 


Gravel  30  to  45   ft.  deep  is  considered  easy  digging 
by  Oroville  operators.    Under  the  head  of  'labor'  are  in- 


296  THE  ECONOMICS  OF  MINING 

eluded  the  superintendent's  salary  and  such  work  on  re- 
pairs as  could  be  made  without  the  aid  of  the  local  custom 
machine-shop.  For  December,  the  first  month  of  opera- 
tion, the  costs  are  increased  under  the  head  of  'labor,'  by 
superintendent's  salary  prior  to  start  of  actual  digging; 
and  under  head  of  'general  expense,'  by  all  the  organiza- 
tion expenses  of  the  company,  the  taxes  on  land  and  the 
insurance  for  one  year.  In  April  high  water  forced  an 
entire  shut-down,  thus  accounting  for  the  small  yardage. 
Tower'  is  increased  by  reason  of  the  pumping  of  water 
from  the  river  to  the  dredge-pond ;  it  has  since  been  found 
advisable  to  obtain  water  from  a  ditch  at  about  $75  per 
month.  One  new  stacker-belt  was  bought  during  the  year 
and  a  4O-h.  p.  motor  for  the  pumps,  to  replace  one  of 
30  h.  p.  which  proved  inadequate.  While  the  bucket- 
line  kept  in  good  condition,  there  was  no  general  replace- 
ment of  parts,  the  bucket-backs  being  still  in  use  in 
October,  1904.  Stacker-belt  No.  3  was  purchased  in 
January,  1904,  and  is  now  about  worn  out  with  8 
months'  use,  although  guaranteed  for  one  year.  This, 
with  the  expense  of  an  entire  new  bucket-line  stacker-belt 
recently  purchased,  and  other  parts,  has  kept  the  costs  for 
1904  somewhat  above  figures  for  1903,  although  an  in- 
creased yardage  averaging  over  40,000  cu.  yd.  per  month 
has  been  dug.  The  table  includes  all  expense  incurred 
for  whatever  reason,  but  does  not  include  interest  nor  a 
sum  for  amortization  of  the  capital  invested  in  land  and 
dredge. 

Above  is  a  summary  of  the  operating  expense  of  a  5-ft. 
intermittent  bucket-dredge  for  the  calendar  year  1903. 
This  dredge  cost  $45,000,  which  is  much  lower  than  that 
of  the  better  class  of  dredges  now  being  installed.  Most 
of  the  ground  was  fairly  easy  digging,  but  little  tight 
gravel  being  encountered.  Proportion  of  time  in  opera- 
tion, 69.4;  bank  measurement,  474,610  cu.  yd.  The  aver- 
age cost  was  as  follows:  Operative  labor,  i.85c. ;  power, 


GOLD  DREDGING  AT  OROVILLE          297 

1.150.;  repairs  and  supplies,  3.460.;  general  expenses, 
1.250.;  total,  7.710.  per  cu.  yd. 

'Operative  labor'  includes  superintendent's  salary  per 
cubic  yard;  'repairs  and  supplies'  includes  the  labor  of 
repairs,  as  well  as  the  materials ;  'general  expense'  covers 
general  expense  at  Oroville  and  at  San  Francisco,  taxes, 
insurance,  and  bullion  charges,  beside  the  expenses  of 
prospecting.  To  the  above  should  be  added  interest  on 
the  money  invested,  including  the  dredging  plant  and 
land,  which  may  be  assumed  as  approximately  0.750.  per 
yd.,  and  about  $4,50x3  for  yearly  depreciation  of  the 
dredge,  say  ic.  per  yd.  This  brings  the  total  expense 
close  to  9.50.  per  yd.  Out  of  the  profits  there  still  has  to 
be  written  off  another  amount  to  cover  loss  in  the  value  of 
the  land  dredged. 

The  following  figures  for  the  month  of  September, 
1904,  were  made  by  a  new  5-ft.,  close-connected,  bucket- 
line  dredge,  digging  on  a  spud  in  soft  ground  40  ft.  deep, 
under  very  favorable  Oroville  conditions :  Total  excava- 
tion, 96,112  cu.  yd.  The  cost  of  labor  was  0.9570.; 
power,  0.9990. ;  supplies,  0.9350. ;  sundry,  0.43000. ;  taxes 
and  insurance  proportion  for  the  month,  0.10750.;  total, 
3.42850.  per  cu.  yd.  There  was  no  charge  for  mainte- 
nance and  repairs  during  the  month. 

All  repairing  necessary  was  done  by  the  regular  crew, 
no  shut-down  for  that  purpose  of  any  moment  taking 
place,  thus  accounting  for  the  large  yardage  and  the  in^ 
significant  expense  for  repairs.  On  the  other  hand,  costs 
for  one  company  have  run  for  several  months  together 
over  2oc.  per  cu.  yd.,  which  shows  the  amount  of  varia- 
tion encountered,  and  the  erroneous  impression  given  by 
costs  which  cover  but  a  short  period  of  Jime. 

Figures  recently  quoted,1  with  no  details  as  to  items 
included,  give  yearly  averages  of  from  4.92  to  7.470.  per 
cu.  yd.,  the  general  average  for  a  number  of  years  being 

1  This  JOURNAL,  October  6,  1904,  p.  541. 


298  THE  ECONOMICS  OF  MINING 

6c.  These  figures  may  contain  all  legitimate  charges 
against  operating  costs,  notwithstanding  the  fact  that  the 
intermittent  bucket-line  type  of  dredge  is  used,  as  this 
particular  company  works  under,  very  favorable  condi- 
tions, namely,  dredging  almost  exclusively  in  the  present 
river  channel,  thereby  saving  the  cost  of  water  and  en- 
countering only  loose  and  easily  dug  gravel,  and  having  a 
well-equipped  machine-shop  devoted  to  dredge-repairs 
and  operating  five  dredges  in  the  same  vicinity. 

The  manager  of  this  company,  in  common  with  others 
equally  well  informed,  holds  that  the  average  of  operating 
costs  for  the  Oroville  district  is  certainly  not  less  than  70. 
per  cu.  yd.  at  this  time. 

It  is  evident  that  with  more  than  one  dredge,  items  such 
as  superintendence,  repairs,  office  expense,  etc.,  may  be 
materially  reduced.  What  the  future  may  hold  forth  to 
operators  of  large  and  improved  dredges  is  hazardous  to 
say,  but  predictions  are  freely  made  of  a  cost  of  from  4 
to  5c.  per  yd.  under  favorable  circumstances. 

Conditions  favorable  to  dredging  at  a  low  cost  must 
approximate  those  found  commonly  at  Oroville,  namely, 
a  soft  and  not  uneven  bedrock,  few  boulders  over  500  Ib. 
in  weight,  gravel  banks  from  20  to  60  ft.  deep  and  not 
sufficiently  indurated  to  require  blasting,  a  plentiful  supply 
of  water,  cheap  power,  machine-shop  facilities,  nearness 
to  supplies  and  means  of  transportation,  mild  winters  and 
intelligent  labor  at  reasonable  wages. 

Gold  concentrated  on  a  hard,  rough  bedrock  cannot  be 
dredged.  Very  large  boulders  have  to  be  left  with  con- 
siderable gravel  surrounding  them,  and,  if  many  are  en- 
countered, dredging  becomes  impossible.  In  departing 
from  the  favorable  conditions  stated  above,  the  expense 
and  difficulty  of  operation  increases,  necessitating  a  higher 
grade  of  ground  for  profit. 

The  conditions  bearing  on  the  cost  of  operation  are  such 
that  each  tract  of  ground  becomes  a  problem  in  itself,  and 


GOLD  DREDGING  AT  OROVILLE          291) 

any  attempt  to  use  the  costs  obtained  under  one  set  of 
conditions,  to  predict  those  which  would  hold  under 
others,  without  a  thorough  knowledge  of  the  various 
elements  which  enter  the  problem,  will  lead  to  large  dis- 
crepancies between  the  results  predicted  and  those  ac- 
tually obtained,  with  a  possible  consequent  failure  of  the 
enterprise.  Much  remains  to  be  learned  about  gold 
dredging ;  but,  in  the  future,  as  well  as  in  the  past, 
progress  will  no  doubt  result  from  the  helpful  professional 
spirit  prevalent  in  the  Oroville  district.  Good  dredging 
conditions  are  not  generally  found  with  gravel  deposits; 
but  no  form  of  mining  gives  more  certain  results,  pro- 
vided the  average  content  of  the  deposit  and  the  operating 
facilities  have  been  found  favorable  by  competent  investi- 
gators, and  a  suitable  dredge  be  installed. 


THE    BASIS    OF    VALUE 

(Editorial,  December  15,  1904.) 

The  recent  break  in  the  share  quotations  of  the  Amal- 
gamated Copper  Company  and  the  Greene  Consolidated 
Copper  Company  doubtless  illustrates  several  of  the  va- 
garies of  human  nature  and  some  of  the  eccentricities  of 
speculation;  but  unlike  as  these  two  undertakings  un- 
doubtedly are  in  many  respects,  they  bear  one  resemblance 
in  the  lack  of  proper  information  given  to  sharehold- 
ers. It  is  manifest  that  when  either  the  financial  condi- 
tions or  the  metal  markets  affect  adversely  the  quoted 
value  of  mining  shares,  those  will  suffer  most  which  are 
rendered  vulnerable  by  absence  of  reliable  information. 
The  daily  press  may  very  properly  sneer  at  Mr.  T.  W. 
Lawson  and  attempt  to  deny  him  his  hard-bought 
notoriety  by  referring  to  him  as  "a  Boston  operator" ;  but 
the  fact  is  that  neither  he  nor  any  other  adventurer  could 
depress  a  security  such  as  Amalgamated  if  it  published 
proper  reports  and  balance  sheets.  As  it  is,  the  helpless 
speculator  knows  nothing  of  the  assets  or  of  the  intrinsic 
value  of  the  property  represented  by  his  share  certificates ; 
it  may  be  a  South  Sea  bubble  of  iridescent  air,  and  he 
might  as  well  throw  his  money  on  the  roulette  table.  We 
venture  to  say,  however,  that  if  a  proper  accounting  of 
the  business  were  given,  accompanied  by  reports  on  the 
physical  condition  of  the  mines  by  the  technical  chiefs, 
such  men  as  Mr.  Benjamin  B.  Thayer  or  Mr.  Charles  W. 
Goodale,  the  value  of  Amalgamated  shares  would  rest  on 
a  solid  basis  of  fact.  Similarly,  in  regard  to  Greene  Con- 
solidated, splendid  mine  as  it  is,  nothing  definite  or  sat- 
isfactory is  given  in  the  reports  issued  to  shareholders. 
Vague  and  flamboyant  statements  are  issued  by  the  presi- 
dent and  a  handsome  production  is  undoubtedly  being 
made,  but  none  of  the  usual  and  proper  estimates 
of  orerreserves  are  given  to  the  shareholders — and 


THE  BASIS  OF  VALUE  301 

without  these,  the  rate  of  dividend,  cost  of  cop- 
per, and  so  forth,  are  illusive.  Here  again,  we  ven- 
ture to  say  that  if  such  members  of  the  management 
as  Mr.  Arthur  S.  Dwight  or  Mr.  W.  B.  Devereux  were 
to  make  a  report  on  the  ore-reserves  and  future  prospects, 
there  would  be  given  a  stability  to  the  investment  in  this 
copper  mine  such  as  it  can  never  possess  under  existing 
circumstances.  Whether  people  buy  as  gamblers  or  as 
investors,  sooner  or  later  they  must  face  the  facts,  and 
the  fundamental  fact  in  a  mining  enterprise  is  the  known 
quantity  of  ore  in  the  mine. 


EQUIPMENT    AND    ORE-RESERVES 

(December   15,    1904.) 

The  Editor: 

SIR — I  have  been  greatly  interested  in  following  the 
discussion  on  'Ore-Reserves,'  together  with  your  impar- 
tial treatment  of  the  subject.  It  is  an  excellent  illustra- 
tion of  the  timely  fruitfulness  of  developing  a  subject  in 
this  way.  Indeed,  I  know  of  no  greater  service  that  the 
leading  mining  journal  of  the  world  can  perform  than 
to  thresh  out  such  puzzling  questions  by  public  discussion. 
Here  is  something  practical.  The  faulting  of  the  strata 
of  the  stock  market  may  confuse  many  a  wise  and  honest 
director  or  superintendent,  who  wishes  to  follow  the 
pay-streak  of  honesty,  and  the  vein  of  business. 

Firstly,  I  would  cordially  agree  with  you  in  the  wis- 
dom of  dealing  frankly  with  the  public.  If  ore-reserves 
are  to  be  hoarded,  let  the  knowledge  of  the  fact  of  re- 
serves be  as  open  as  is  the  existence  of  the  mine  itself. 
Indeed,  there  is  no  more  signal  mark  of  ethical  progress, 
in  civilization  at  large,  and  in  the  control  of  business  in 
particular,  than  the  growing  demand  by  the  people  for  a 
free,  open  statement  of  the  respective  facts.  The  people 
may  not  always  get  this,  but  they  have  learned  to  ask  for 
it ;  and  in  this  I  presume  that  vox  populi  is  vox  Dei.  . 

But  secondly,  assuming,  to  be  specific,  that  the  con- 
trasted views  of  Mr.  Hoover  and  Mr.  Curie  represent  the 
opposite  opinions  of  the  speculator  and  of  the  investor 
respectively,  is  it  fair  to  formulate  the  questions  at  issue 
from  the  standpoint  of  either,  or,  for  that  matter,  from 
a  standpoint  intermediate  between  both?  That  is,  may 
there  not  be  other  and  more  powerful  considerations  of 
business,  to  the  demands  of  which  the  private  interests 
of  both  investor  and  speculator  must  conform?  It  may 
be  true,  for  the  present — as  the  speculator  is  furnishing 
most  of  the  money  necessary  to  develop  mines — that  his 


EQUIPMENT  AND   ORE-RESERVES      303 

interests  must  be  consulted;  this  may  be  a  present  busi- 
ness necessity.  But  is  it  possible  to  educate  the  specu- 
lator to  the  more  rational  views  of  the  investor?  And  is 
it  possible,  in  turn,  to  quicken  the  investor  with  the  spec- 
ulator's practical  keenness  for  results?  And  to  do  both 
so  that  business  practice  may  attain  that  method  of  mine 
management  which  is  best  for  all  concerned  in  the  long 
run? 

Then,  thirdly,  what  will  best  serve  the  real  purpose  of 
capital  invested?  If  the  application  of  actuary  mathe- 
matics to  such  problems  were  highly  developed,  it  would 
be  necessary  only  to  refer  to  a  manual  of  dividend  accu- 
mulation, amortization  of  investment,  sinking  fund  reduc- 
tion, etc.,  to  know  at  once  what  are  the  financial  forces 
that  are  competing  for  control  as  this  complex  of  interests 
seeks  its  natural  equilibrium. 

Now  a  mine,  even  a  large  one,  with  large,  well-defined 
veins  carrying  a  generous  supply  of  ore,  even  this  is  not 
like  a  farm  which  may  go  on  indefinitely  producing  from 
the  same  ground  year  after  year.  An  exhausted  mine 
is  simply  an  empty,  worthless  hole  in  the'  ground ;  and 
this  may  be  the  destiny  of  all  mines.  This  view  would 
seem  to  argue  distinctly  for  the  speculator.  The  mine 
is  bound  to  be  exhausted  sooner  or  later;  working  it  is 
like  the  threshing  of  this  year's  wheat  crop ;  let  it  be  done 
and  done  as  quickly  as  possible,  so  as  to  release  the  capital 
for  employment  in  other  fields.  The  illustration  is  good ; 
but  it  is  not  an  argument.  It  is  at  best  only  an  analogy 
which  can  be  applied  to  certain  mines,  namely,  those 
which  can  be  quickly  exhausted.  As  for  the  other  class  of 
mines,  those  like  the  Treadwell,  the  Homestake,  or  better 
still,  some  imaginary  reef  or  mountain — as  the  gold  in 
the  ocean,  for  instance — which  might  be  practically  inex- 
haustible, in  such  cases  would  not  the  policy  of  counting 
on  long  supplies  for  the  long  investor  be  the  better? 

This,  then,  is  the  suggestion  that  I  would  make,  and  I 


304  THE  ECONOMICS  OF  MINING 

wish  you  would  so  discuss  it.  Is  not  the  interest  of  the 
transient  speculator,  represented  by  Mr.  Hoover,  justified 
by  the  conditions  of  some  mines?  And,  on  the  other 
hand,  is  not  the  interest  of  the  long  investor,  represented 
by  Mr.  Curie,  equally  well  justified  by  the  conditions  of 
other  mines?  Do  not  both  views  represent  some  truth — 
but  only  as  applied  to  special  cases?  Will  it  not  be  well 
to  continue  the  discussion  till  we  may  see  clearly  brought 
out  the  particular  kind  of  mine  to  which  applies,  re- 
spectively, the  interest  of  the  investor  and  of  the  specu- 

lator?  C.  S.  PALMER. 

New  York,  December  5,  1904. 


LEASING   AT   CRIPPLE    CREEK 

(December    15,    1904.) 

The  Editor: 

>  Sir — There  has  been  a  considerable  improvement  lately 
in  the  output  of  the  Cripple  Creek  district,  both  in  quan- 
tity and  quality  of  ore.  Simultaneously  there  has  been  a 
decided  extension  of  the  leasing  system  both  in  practice 
and  in  popular  favor.  Undoubtedly  a  portion  of  the  im- 
proved results  are  due  to  the  success  of  many  leases — 
especially  on  Stratton's  Independence.  It  occurs  to  me 
that  a  discussion  of  the  merits  and  province  of  the  lessee 
as  compared  with  those  of  the  company's  miner  and  min- 
ing engineer  may  interest  a  portion  of  the  mining  public. 
Many  suppose  that  the  reason  why  lessees  often  do 
markedly  better  than  companies  is  that  they  get  more 
work  out  of  their  men  and  do  a  good  deal  of  the  work 
themselves*.  Undoubtedly  in  general  this  is  true,  but  the 
importance  of  this  point  is  much  less  than  many  imagine, 
and  there  is  no  reason  why  a  mine  superintendent  cannot 
make  his  men  work  just  as  hard  as  a  lease  superintendent 
can.  In  fact,  it  is  possible  for  a  mine  superintendent  to 
accomplish  just  as  good  results  for  his  company  as  a 
lessee  can  for  himself.  Many  leases  of  importance  in  the 
Cripple  Creek  district  are  managed  by  hired  superinten- 
dents, just  as  mining  companies  are.  In  my  opinion  the 
superiority  of  the  lessee  comes  from  the  fact  that  his  train- 
ing qualifies  him  to  find  ore  and  mine  it  to  the  best  ad- 
vantage. He  is  often  aided  by  the  fact  that  he  has  no 
professional  record  to  make.  He  is  not  worried  about 
costs  per  ton.  His  sole  object  is  to  make  money,  and  he 
makes  it  by  shipping  clean  ore. 

Nobody  hears  of  leases  in  any  mines  except  those 
where  (i)  the  ore  is  a  concentrating  one,  or  (2)  the  find- 
ing of  the  ore  is  the  principal  part  of  the  work.  It  is 
curious  to  note  how  little  there  is  in  mining  literature  on 


306  THE  ECONOMICS  OF  MINING 

the  subject  of  mining  concentrating  ores.  By  concen- 
trating ore  I  mean  an  ore  in  which  the  metal  sought  is 
not  uniformly  distributed  through  the  mass ;  in  other 
words,  an  ore  consisting  in  large  part  of  worthless  rock 
which  must  in  some  way  be  separated  from  the  valuable 
mineral.  Most  of  the  mines  in  the  Rocky  Mountain 
region  are  of  this  character.  The  handling  of  such  ore- 
bodies  affords  a  much  greater  scope  for  intelligence  and 
business  judgment  than  does  the  extraction  of  a  body 
of  uniform  ore.  In  the  latter  case,  one's  efficiency  can  be 
measured  in  cost  per  ton  of  ore  mined.  In  the  former, 
one's  efficiency  must  be  measured  by  the  cost  of  metals 
produced.  It  is  not  fair  even  to  make  a  comparison  of 
the  cost  of  concentrates ;  in  the  case  of  lead  ores,  for 
example,  one  man  may  take  a  50  per  cent  concentrate 
and  another  a  70  per  cent.  Obviously  in  a  concentrating 
proposition  the  main  effort  is  to  get  rid  of  the  worthless 
gangue  and  save  the  valuable  metal.  Whether  this 
gangue  can  best  be  removed  in  the  process  of  mining,  or 
in  a  concentrating  mill,  or  partly  in  both,  is  often  a  ques- 
tion upon  the  solution  of  which  depends  the  success  of  a 
mining  venture. 

In  Cripple  Creek  the  ores  are  almost  universally  of  the 
mixed  type.  They  will  not  yield  to  ordinary  methods  of 
water  concentration.  After  the  ore  is  broken  it  can  only 
be  separated  crudely  by  means  of  screening,  supplemented 
by  hand-picking;  but  the  concentrating  can  be  begun  at 
the  moment  the  drilling  begins  underground  by  taking 
care  to  break  nothing  except  what  will  pay.  There  is 
plenty  of  room  for  skill  and  experience  in  determining 
such  questions  as  the  following:  (i)  what  ground  to 
break  and  what  to  leave;  (2)  where  to  put  the  holes  and 
how  much  powder  to  use  in  breaking  in  order  to  leave  the 
rock  in  the  best  condition  for  effective  sorting;  (3) 
whether  it  is  best  to  sort  underground,  or  on  the  surface, 
or  both;  (4)  whether  to  use  hand-drills  or  machines;  (5) 


LEASING  AT  CRIPPLE  CREEK  307 

what  appliances  to  use  in  the  shape  of  washers,  sorting- 
tables,  picking  belts,  etc.,  etc. 

Each  of  these  questions  of  handling  the  ore  may,  and 
does,  vitally  affect  the  lessee's  pocketbook.  He  must  do 
his  mining  solely  with  a  view  to  making  profits,  for 
profits  he  must  have  or  quit.  A  mine  manager  may  go 
through  the  motions  of  mining  in  apparently  good  style. 
He  may  have  nice  machinery,  good  pumps,  elaborate  re- 
ports, accurate  cost-sheets — and  no  profits.  He  may 
mine  large  orebodies  at  small  cost.  He  may  point  with 
pride  to  the  very  things  that  ought  to  condemn  him  as 
hopelessly  incompetent.  He  may  be  mining  too  much  and 
mining  too  cheap.  In  saving  at  the  spigot  he  may  be 
losing  at  the  bung. 

The  lessee  rarely  commits  such  blunders.  He  thinks 
solely  of  dollars  and  cents.  He  makes  no  reports  and 
seldom  bothers  about  indicator  cards,  but  he  watches  his 
ore  like  a  hawk  and  mines  it  right.  He  ignores  the  frills 
and  attacks  the  substance  of  his  business. 

So  far  so  good.  But  the  lessee's  limitations  are  also 
conspicuous.  Ordinarily  his  interest  in  the  property  does 
not  extend  beyond  the  hope  of  making  some  money  out 
of  a  limited  block  of  ground.  His  development  work  is 
apt  to  be  done  grudgingly  and  with  little  attention  to  its 
subsequent  utility.  In  mines  that  have  been  partially 
developed  by  the  leasing  system  it  often  happens  that  the 
entire  mine  must  be  re-opened  on  more  comprehensive 
lines  before  it  can  be  worked  out.  It  usually  happens 
also  that  the  owners  fall  back  at  last  upon  the  services  of 
hired  managers  who,  while  having  some  qualifications 
that  the  lessees  lack,  are  deficient  in  the  very  important 
practical  virtues  that  the  lessees  possess. 

It  seems  to  me  that  the  lessee  fills  a  peculiar  province 
in  the  mining  business  that  is  essentially  his  own — that 
of  furnishing  the  hard  common  sense  and  practical  en- 
terprise necessary  to  exploit  doubtful  and  poorly  man- 


308  THE  ECONOMICS  OF  MINING 

aged  mines.  He  has  to  take  chances,  and  in  taking  them 
he  is  rewarded  by  a  certain  percentage  of  successes.  He 
takes  chances  that  a  thoroughly  competent  mining  engi- 
neer might  not  be  willing  to  advise. 

There  is  much  that  the  average  lessee  knows  which 
should  be  essential  to  the  success  of  every  mining  operator, 
but  which  is  strangely  neglected  by  many.  There  are 
some  mine  managers  who  appear  to  forget  that  their  busi- 
ness is  mining,  and  who  neglect  the  problem  of  handling 
the  ore  to  spend  their  time  on  refinements  which  may  be 
of  importance,  but  which  ought  to  be  left  to  others.  I 
believe  it  to  be  rare  that  any  amount  of  technical  knowl- 
edge is  of  sufficient  value  to  cover  up  a  deficiency  in  the 
knowledge  of  plain,  straight  mining.  When  the  lessee 
demonstrates  by  his  success  that  such  deficiency  has  ex- 
isted elsewhere,  he  is  doing  the  business  and  the  profes- 
sion a  great,  but  perhaps  unconscious,  service. 

J.  R.  FINLAY. 
Colorado  Springs,  November  14,  1904. 


SECRECY  IN   MINING 

(Editorial,  December   29,    1904.) 

The  West  Australian  Commission,  empowered  to  hold 
an  inquiry  into  the  fiasco  arising  from  the  manipulation 
of  shares  in  the  Boulder  Deep  Levels  at  Kalgoorlie,  has 
presented  its  report  to  the  State  government.  It  is  recom- 
mended : 

"(0  That  all  mines  shall  be  open  to  inspection  by 
shareholders  at  convenient  hours.  (2)  That  the  Minister 
of  Mines  shall  be  empowered  to  authorize  an  official  to 
take  samples  from  any  property,  inspect  the  working,  and 
(3)  compel  the  companies  to  keep  assay  plans,  also  plans 
of  the  underground  workings  where  they  will  be  avail- 
able for  inspection  by  shareholders.  (4)  It  is  further 
recommended  that  misrepresentation  or  concealment  of 
facts  shall  be  punishable  by  fine  or  imprisonment,  and 
(5)  that  managers'  reports  shall  be  published  locally 
coincidently  with  their  reaching  the  head  office.  The 
Commission  says  that  the  enforcement  of  these  recom- 
mendations will  put  an  end  to  secrecy  adopted  by  some 
mines." 

The  intention  of  these  recommendations,  in  so  far  as 
they  signify  the  lifting  of  secrecy  from  the  operations  of 
mining  companies,  is  well  enough.  Wrong-doing  grows 
in  the  dark;  the  opening  of  doors  and  the  admission  of 
light  will  do  much  to  check  the  rascality  from  which 
mining  investments  suffer.  Admission  to  mines  should 
be  regulated  so  as  not  to  impede  operations,  and  it  should 
include  the  experts  engaged  by  shareholders,  as  well  as 
the  shareholders  themselves.  A  limit  as  to  the  number  of 
inspections  permitted  during  a  given  period  would  be  a 
reasonable  check  upon  a  practice  which  might  degenerate 
into  a  nuisance.  If  the  Minister  for  Mines  is  to  be  em- 
powered to  send  an  official  to  inspect,  then  the  Minister 
himself,  no  less  than  his  deputy,  must  on  no  account  be 


310  THE  ECONOMICS  OF  MINING 

the  possessor,  buyer,  or  seller  of  the  shares  of  any  mine 
in  the  region  over  which  he  holds  this  authority.  Assay- 
plans  and  maps  are  necessary  to  all  mines,  whether  large 
or  small;  and  this  recommendation  should  meet  with 
unqualified  approval.  We  presume  that,  in  order  to 
punish  misrepresentation  and  concealment  of  facts,  the 
intention  to  defraud  would  have  to  be  proved;  this  is  a 
legal  matter,  the  settlement  of  which  is  unimportant,  for 
if  secrecy  is  eliminated,  misrepresentation  will  be  unsuc- 
cessful. The  publication  of  reports  locally,  as  well  as  in 
London,  is  reasonable;  it  will  work  no  hardship  on  the 
shareholders  in  Europe  or  elsewhere,  and  it  will  be  a 
proper  concession  to  Australian  shareholders.  If  the 
Western  Australian  government  imposes  such  a  condi- 
tion, we  do  not  see  why  the  Englishman  should  object. 
This  also  will  serve  as  an  obstacle  to  the  manipulation  of 
the  local  stock  market,  by  encouraging  the  diffusion  of 
official  information  simultaneously  at  both  ends,  the  head 
office  in  London  and  the  place  where  the  mine  is  situated. 
Everything  that  tends  to  give  shareholders  full  informa- 
tion, works  for  the  investment  aspect  of  mining;  changes 
in  the  physical  condition  of  a  mine  are  frequent,  but  these 
account  for  only  one-quarter  of  the  fluctuations  in  shares. 
A  straightforward  policy  gives  security,  and  without  that 
a  mine  becomes  merely  the  sport  of  gamblers. 


MINE  VALUATION 

(Editorial,  January  19,  1905.) 

On  another  page  we  reply  to  a  correspondent  in  Mex- 
ico, who  asks  for  an  explanation  of  the  use  of  annuity 
tables  in  the  appraisal  of  mine  shares,  and  we  have  taken 
the  opportunity  to  publish  Inwood's  tables,  which  are 
used  by  investors  in  South  African  mines.  To  some  of 
our  readers,  it  will  seem  absurd  to  apply  such  methods 
to  the  cheerful  gamble  of  a  mining  venture ;  and  to  these 
same  readers,  the  vagaries  of  gentlemen  from  Arizona 
and  prophets  from  Boston  are  fit  and  proper  adjuncts  to 
an  industry  the  importance  of  which  to  us,  on  the  other 
hand,  can  be  gauged  not  only  in  terms  of  money,  but 
also  by  the  education  and  character  of  the  profession 
which  tries  to  serve  it  faithfully,  despite  the  careless  dis- 
regard of  an  ignorant  public.  To  many  speculators,  the 
talk  of  amortization  of  capital,  return  of  investment,  life 
of  mine,  and  other  financial  terms  indicative  of  serious 
business,  is  only  an  irritation;  and,  when  you  speak  to 
them  of  the  necessity  of  a  mine  paying  back  the  market 
valuation,  plus  interest  on  the  investment,  they  grow 
weary.  But  it  does  not  need  a  long  lifetime  to  appreciate 
the  fact  that  mining  is  slowly  emerging  from  the  muddy 
shallows  of  spurious  finance  to  a  dignified  business ;  and, 
if  our  insistence  on  certain  fundamental  principles  can 
contribute  to  that  end,  one  of  the  purposes  of  this  JOUR- 
NAL will  be  fulfilled.  It  is  pitiful  to  notice  how  the  daily 
press,  in  its  comment  on  the  Montreal  &  Boston  impos- 
ture, appears  to  accept  a  low  standard  of  morality  as  in- 
herent in  mining  affairs,  without  so  much  as  a  side  glance 
at  disgraceful  messes  such  as  that  of  the  Shipbuilding 
Company,  and  other  industrial  undertakings  whose  spon- 
sors sit  in  high  places. 

Those  who  buy  shares  to  sell  them  at  a  higher  price 
usually  have  little  regard  for  niceties  of  valuation,  and 


312  THE  ECONOMICS  OF  MINING 

consider,  properly  enough,  that  market  conditions  are  a 
more  important  factor  than  any  academic  ratiocinations; 
but,  even  for  those  gentlemen  who  dabble  on  the  danger- 
ous margin  of  the  financial  rapids,  it  will  be  found  well  to 
have  an  idea  of  that  which  is  the  fundamental  basis  of 
their  speculations.  Sooner  or  later,  they  must  face  the 
facts ;  every  speculator  eventually  fails  to  find  one  more 
reckless  than  himself.  Ore-reserves,  and  profits  derived 
from  them,  are  the  essence  of  successful  mining  enter- 
prise; without  them,  the  mine  is  only  a  hole  in  the 
ground.  Dividends  indicate  the  surplus  of  a  moment; 
they  are  no  criterion  of  future  returns,  unless  these  are 
insured  by  accurately  measured  reserves  of  ore.  Low 
costs  are  a  symptom  of  healthy  economy,  but  they  do 
not  guarantee  profits;  they  simply  prove  that  the  minus 
quantity  to  be  deducted  from  the  value  of  the  production 
is  relatively  small.  Good  management  does  not  make  a 
mine ;  it  is  only  an  aid.  We  sympathize  with  the  unfor- 
tunate Britisher  who,  after  several  experiences  with  poor 
mines  and  good  managers,  is  said  to  have  exclaimed  that 
in  future  he  would  invest  in  mines  that  could  stand  bad 
management.  Properly  ascertained  resources  in  the  form 
of  orebodies,  thoroughly  sampled  and  measured,  are  the 
only  assurance  of  the  long  life  of  a  mining  enterprise ; 
and,  without  such  assurance,  it  is  not  an  investment.  But 
this  does  not  belittle  the  worthiness  of  sensible  specula- 
tion, which  has  been,  and  ever  will  be,  the  quickest  way  to 
make  money.  We  simply  desire  to  emphasize  the  essen- 
tials of  an  'investment,'  which  is  the  attractive  term  too 
generally  applied  to  schemes  of  an  essentially  speculative 
character.  Pay  your  money  and  take  your  choice;  but, 
for  the  sake  of  sound  mining,  let  us  make  distinctions 
which  are  essential. 


MINE  VALUATION 

(January    19,    1905.) 

The  Editor: 

Sir — I  quote  from  the  editorial  in  your  issue  of  De- 
cember 8,  1904,  entitled  'The  Logic  of  Valuation' :  "In 
the  first  place,  an  investment  in  a  well  developed  copper 
mine  should  yield  10  per  cent ;  secondly,  5  per  cent  should 
be  set  aside  for  a  sinking  fund  to  redeem  the  principal. 
By  the  annuity  tables,  it  is  found  that,  assuming  10  years' 
life  for  the  mine,  the  number  of  years'  purchase  of  divi- 
dend to  yield  10  per  cent  income  and  redemption  of  prin- 
cipal at  5  per  cent  compound  interest  is  6.14  years.  This 
6.14,  multiplied  by  the  annual  dividend — $4.80 — makes 
$29.47,  say,  $30,  which  is  the  amount  that  should  be  paid 
per  share  to  give  the  purchaser  10  per  cent  income, 
and  return  to  him,  at  the  end  of  10  years,  the  price  which 
he  paid  for  the  share." 

I  encounter  this  question  of  "so  many  years'  purchase, 
at  so  much  income,  and  redemption  of  principal  at  a  cer- 
tain interest,"  very  frequently;  and  I  am  free  to  say  that 
it  is  obscure  to  me,  though  I  have  no  doubt  it  works  out 
in  a  very  simple  form.  As  a  matter  of  fact,  this  whole 
matter  of  capitalization  of  a  debt,  annuity  etc.  amortiza- 
tion, number  of  years'  purchase  of  dividend,  sinking 
fund,  and  annuities  is  only  vaguely  understood  by  me, 
and  I  should  like  to  obtain  some  convenient  manual 
whereby  I  can  post  myself  thoroughly.  Can  you  recom- 
mend anything  on  the  list  of  works  handled  by  your 
JOURNAL  that  will  fill  the  bill  ? 

There  may  be  others  among  your  subscribers  whose 
experience  with  financial  questions  of  this  particular 
nature  is  as  limited  as  mine;  and  if  you  would  elucidate 
the  point  mentioned  in  your  editorial,  you  .would  confer  a 
favor  on  us  all.  E  H  W 

Parral,  Mexico,  December  19,  1904. 


314  THE  ECONOMICS  OF  MINING 

[The  amortization  of  capital  invested  in  equipment  as 
related  to  the  decreased  cost  attained  by  such  additional 
machinery  has  been  discussed  in  this  JOURNAL  by  several 
writers,  notably  Mr.  H.  C.  Hoover,  in  our  issue  of  March 
24,  1904.  A  discussion  ensued,  and  to  this  our  corre- 
spondent is  referred.  Amortization  is  the  recovery  of 
capital  invested,  at  the  end  of  a  certain  term.  Number 
of  years5  purchase  means  the  number  of  annual  profits 
which  together  represent  a  return  of  the  capital;- a  mine 
sold  for  $100,000  is  bought  at  five  years'  purchase  if  it 
yields  $20,000  profit  per  annum.  The  question  of  life 
and  return  of  capital  on  the  basis  of  an  annuity  is  a  more 
complicated  question.  In  1811  Inwood's  tables;  were  first 
published;  they  give  the  present  value  of  an  annuity  at 
different  rates  per  cent  for  any  number  of  years  and 
replacement  of  principal  on  termination  of  the  annuity. 
What  immediate  lump  sum  must  one  pay  to  receive  $25 
annuity  and  have  the  money  paid  for  the  annuity  replaced 
at  the  end  of  25  years  ?  The  tables  in  question  give  the 
answer  in  the  form  of  the  number  of  years'  purchase  of 
the  annuity.  At  5  per  cent,  the  present  price  to  be  paid 
for  a  25  years'  annuity  is  14  years'  purchase  of  annuity. 
These  annuity  tables  can  be  applied  to  the  valuation  of 
mine  shares,  and  they  have  been  so  applied  by  the  in- 
vestors in  South  African  mines.  We  applied  the  method 
recently,  as  quoted  above  by  our  correspondent.  Of 
course,  as  a  rule,  mining  enterprises  do  not  lend  them- 
selves to  such  logical  treatment,  as  investors  rarely  lock 
up  their  scrip  for  five  or  ten  years,  either  actually  in  a 
safe  or  mentally,  by  their  way  of  regarding  their  com- 
mitments. But  the  mine  which  has  ceased  to  be  a  pros- 
pect— essentially  a  gamble — and  has  developed  even  be- 
yond the  early  stages,  when  it  is  a  highly  speculative 
risk,  to  that  stage  of  assured  productiveness  which  war- 
rants the  application  of  the  term  'investment' — such  a 
mine  can  be  valued  in  a  logical  manner  or  else  it  should 


MINE  VALUATION 


315 


Number  of  years'  Purchase  of  Dividend  to  Yield  6  to  10  Per  Cent 
Income  and  Redemption  of  Principal  (5  Per  Cent  Compound 
Interest}. 


"Life." 
I  

At  5  Per 
Cent. 
.95 

At  6  Per 
Cent. 
.04 

At  7  Per 
Cent. 
.03 

At  8  Per 
Cent. 

•93 

At  9  Per 

Cent. 
.92 

At  10  Per 
Cent. 
.91 

2  

::  1  1 

ifi 

1.8? 

1.78 

1.76 

1.74 

3.  . 

2.72 

2.67 

2.62 

2.58 

2.53 

2.49 

4  

7.  54 

3.46 

3.30 

3.31 

3.24 

3.17 

5.  . 

4.77 

4.21 

4.  IO 

3.  90 

3.89 

3-79 

6  

5  oi 

4  76 

462 

4  40 

4  36 

7  

5  78 

C  82 

5  40 

5  21 

5.  03 

4  87 

8  

,    6  46 

6  21 

5  07 

5  75 

5  57 

5.34 

o.  . 

7  II 

6  80 

6  51 

6  25 

6  oo 

O'O^J 

«?  76 

10.  .  .  . 

,     7  72 

7  36 

7  O2 

"••"•O 

6  71 

6  42 

3*' 

6  14 

ii 

7   5O 

7   14 

6  81 

6  ^o 

12 

8  78 

7  O4 

7   c^ 

7  16 

6  81 

13.  . 

,      9.3Q 

8  85 

836 

7  00 

7.40 

7  10 

14 

9OO 

970 

8  74 

8  24 

7  7O 

7   7O 

1C.  . 

.    10.38 

0.71 

0.  II 

8  56 

8'o6 

7  61 

16 

10  84 

IO    IO 

945 

8  85 

8  31 

7  82 

17. 

II   27 

10  48 

z5 

976 

912 

8   54 

8  02 

18  

II   69 

10  83 

./u 

10  06 

9  37 

8  76 

8  20 

10. 

12  O8 

ii  16 

IO   77 

9  60 

8  O5 

8  37 

20 

12  46 

II   47 

IO   5O 

o  82 

917 

°-o/ 
8   51 

21  

.  .    12  82 

II   76 

10  83 

10  O2 

9  20 

0.51 

8  65 

22  , 

,  .  13  16 

12  O4 

II   06 

IO  20 

944 

23.  . 

.    17  40 

12   3O 

II   27 

10   77 

*jL 

o  58 

8  88 

24.  . 

13  80 

12   55 

II  47 

IO   57 

971 

8  oo 

25.  . 

.    14  OO 

12   78 

II   65 

10  67 

•/  x 

9  82 

9  08 

26  

14.37 

I'l   OO 

II   82 

10  8l 

9O3 

916 

27  

,  .    14  04 

1^   21 

II   08 

10  Q4 

10  03 

924 

28  

.    14  OO 

13  41 

12   14 

II   05 

IO   12 

971 

2Q  

.    jc    14 

J7     CTQ 

12   28 

II    l6 

10  20 

977 

3O.  . 

.    15   37 

13  76 

12  41 

II   26 

10  27 

947 

71.  . 

15     5Q 

17  O7 

12    57 

II    7C 

TO   7/1 

•*K5 
9^8 

32 

•  •    ^o  oy 
15  80 

14  08 

12  6c 

11  -OO 

nA7 

lu-o4 
TO   4T 

•4° 
9C7 

77 

16  oo 

14  27 

12  7C 

II    SI 

TO   A(\ 

Oo 
9tj<7 

7X 

16  19 

14   77 

^•/O 
12   8? 

11.51. 

nCQ 

TO    C2 

O/ 

35  

.  16.37 

14   50 

12  05 

II     65 

IO    57 

96/1 

36.. 

16  54 

14  62 

17  O7 

II    72 

10  61 

o  68 

16  71 

14  74 

17    12 

11  •/•* 
II    78 

TO  6c. 

9*7T 

-g 

.  .  16  87 

14  85 

17    IQ 

II   87 

10  60 

•  I  *• 

0  73 

TO.  . 

17  O2 

14  05 

17   26 

ii  88 

TO   *77 

9*76 

40.  . 

.  .  17  16 

15   O4 

17   77 

II    O7 

lu-/o 
TO   "76 

./u 
9*78 

45  
SO.. 

•  17-77 
.  18.25 

15.46 
15.76 

I3.60 
17.  80 

12.  II 
12.27 

10.88 
10.06 

./o 

9.86 

0    fV2 

316  THE  ECONOMICS  OF  MINING 

be  let  alone.  For  the  convenience  of  our  readers  we  add 
the  annuity  tables  referred  to,  as  they  appear  in  'The 
Mines  of  the  Transvaal,'  published  by  The  Statist,  a 
London  financial  journal  which  has  done  good  work  in 
this  department  of  mining  business. — EDITOR.] 


GRAVEL-MINING  COSTS  IN  ALASKA  AND 
NORTHWEST  CANADA* 

BY  CHESTER  W.  PURINGTON. 

(February    9,    1905.) 

The  data  in  the  table  on  page  318  have  been  compiled 
from  statistics  collected  during  a  recent  inspection  of  the 
placer  fields  in  Alaska,  Yukon  Territory  and  northern 
British  Columbia.  Of  the  statements  furnished  by  opera- 
tors, only  those  which  are  considered  reliable  have  been 
used.  The  work  attempted  had  no  relation  to  the  sam- 
pling or  valuing  of  mining  properties,  and  time  did  not 
permit,  usually,  of  the  measuring  of  the  ground. 

Owing  to  the  varying  conditions  governing  the  cost  of 
mining  in  the  North,  the  territory  has  been  divided  into 
three  provinces.  The  South  Coast  province  includes  the 
Juneau,  Porcupine  and  Sunrise  districts  of  Alaska.  The 
Interior  province  includes  the  Atlin  district  of  British 
Columbia,  the  Klondike  district  of  Yukon  Territory,  and 
the  Fortymile,  Eagle,  Birch  Creek,  Fairbanks  and  Ram- 
part districts  of  Alaska.  The  Seward  Peninsula  province 
includes  the  Nome,  Council  and  Solomon  districts  of 
Alaska.  The  Nizina  district  of  the  South  Coast  province, 
and  the  Port  Clarence,  Fairhaven,  and  Kugrok  districts 
of  the  Seward  Peninsula  are  separately  considered. 

In  preparing  the  sheet,  the  working  costs  of  118  differ- 
ent operations  were  first  tabulated  with  reference  to  the 
method  employed  and  to  situation.  A  second  table  was 
then  prepared,  in  which  the  working  cost  was  augmented 

*  The  figures  that  are  given  here  are  extracted  from  a  re- 
port on  the  'Costs  and  Methods  of  Gravel  and  Placer  Mining 
in  Alaska/  and  here  published  by  permission  of  the  Director  of 
the  United  States  Geological  Survey.  The  data  furnish  as  near 
approximations  as  the  nature  of  the  work  permits.  The  cost  of 
all  supplies,  rates  of  transportation,  cost  of  labor,  and  description 
of  water,  timber  and  fuel  resources  in  all  important  parts  of  the 
territory,  as  well  as  full  descriptions  of  all  the  methods  of  min- 
ing employed,  will  be  given  in  the  final  report. 


318 


THE  ECONOMICS  OF  MINING 


by  an  amount  per  cubic  yard  based  on  allowance  for 
depreciation  of  plant.  A  general  figure  of  six  years  was 
taken  as  the  average  life  of  an  individual  property,  and, 
except  in  the  case  of  winter  drifting  operations,  120  days 


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do}  auidduis  ;}uipnpui  'ssxoq 
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GRAVEL-MINING 


1  * 


~S~3~ 


!p  llgl 


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from 
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other 


COSTS. 


as  the  working  season.  It  was  then  assumed  that  five 
annual  payments  are  made  to  a  depreciation  fund.  The 
fund  is  equivalent  to  the  cost  of  plant  and  maintenance 
of  same  during  the  life  of  the  property,  plus  six  years' 


GRAVEL-MINING  COSTS  319 

simple  interest  on  the  investment  at  5  per  cent.  .  Each 
annual  payment  was  divided  by  the  season's  output  in 
cubic  yards,  and  the  amount  thus  obtained  added  to  the 
daily  working  expenses,  to  get  the  total  output  cost  per 
yard,  as  far  as  possible.  Prices  paid  for  mining  property 
are  taken  no  account  of,  as  they  represent  an  unknown 
factor.  In  cases  where  expensive  plants  have  been  in- 
stalled the  amortization  was  separately  figured  for  each 
case.  In  cases  of  shoveling-in  and  small  mechanical 
plants,  the  installation  and  maintenance  cost  was  taken 
at  an  average  amount  for  a  group  of  operations  in  each 
district.  Where  the  operation  implies  an  additional  strip- 
ping of  overburden,  which  is  always  separately  charged, 
the  cost  was  distributed  and  added  to  the  gravel  extrac- 
tion cost. 

From  the  second  table,  where  the  costs  were  reduced 
to  one  figure  for  each  district,  a  third  table  (as  given) 
was  prepared,  giving  as  nearly  as  possible  the  average 
cost  for  each  of  the  17  separate  methods  considered  in 
one  or  more  of  the  three  provinces.  Where  the  opera- 
tions from  which  the  averages  are  derived  exceed  two  in 
number,  the  fact  is  so  indicated  in  the  table. 

The  attempt  has  been  made  to  reject  figures  which 
were  evidently  not  representative.  The  final  figure  ar- 
rived at  is  not,  however,  always  satisfactory.  For  exam- 
ple, under  No.  5  (the  method  of  working  open-cut  by 
shoveling  into  wheelbarrows,  wheeling  to  bucket,  hoist- 
ing and  conveying  to  sluice  by  self-dumping  carrier  or 
cable),  $2.14  is  representative  for  the  Klondike,  where 
seepage  water  is  generally  pumped  from  the  pit,  and 
many  operators  pump  the  water  for  sluicing.  On  the 
other  hand,  a  plant  in  the  Birch  Creek  district  of 
Alaska,  mining  only  22  cu.  yd.  per  day,  and  handling  the 
water  by  a  drain,  operated  at  a  cost  of  $1.50  per  cubic 
yard.  In  No.  13  (drifting  solidly  frozen  ground,  steam 
or  hot-water  thawing,  hoisting  and  conveying  with  the 


320  THE  ECONOMICS  OF  MINING 

use  of  the  self-pumping  bucket),  the  cost  in  the  Klon- 
dike is  $1.95;  while  the  higher  figure  given  is  arrived  at 
by  combining  the  expensive  American  camps  of  Forty- 
mile  and  Fairbanks,  where  the  cost  is  $4.63  and  $3.56  re- 
spectively. 

The  high  cost  of  hydraulicking  with  use  of  hydraulic 
lift,  in  the  Seward  Peninsula,  is  caused  by  the  difficulty 
of  moving  the  gravel  to  the  bedrock  sluice,1  and  the  ex- 
pense of  the  ditches  and  installations.  Hydraulicking 
by  means  of  water  under  natural  head  without  the  use  of 
the  hydraulic  lift,  or  some  other  means  of  elevating  the 
material,  was  not  seen  in  the  Seward  Peninsula.  It  is 
known  that  a  hydraulic  plant  is  in  successful  operation 
at  Bluff,  50  miles  to  the  east  of  Nome,  but  no  data  are 
available.  In  the  interior,  only  bench  gravels  are  hy- 
draulicked.  Steeper  grades  for  sluices  can  be  obtained, 
and  the  gravel  is  more  easily  moved.  The  high  duty  of 
the  miners'  inch  in  the  Klondike  is  a  large  factor  in 
bringing  down  the  cost  of  No.  i  and  No.  16.  It  should 
be  distinctly  understood,  if  hydraulicking  costs  in  the 
interior  appear  attractively  low,  that  the  water  supply  is 
exceedingly  variable,  and  that  no  reliable  estimate  can 
be  made  beforehand  of  the  output  of  a  given  season's 
operations.  Furthermore,  while  much  of  the  bench 
gravel  was  originally  rich,  the  pay-streaks  have  been 
largely  drifted  out,  and  the  gold  is  not  disseminated 
through  the  upper  portion  of  the  gravel  to  the  extent  that 
it  is  in  California.  With  regard  to  the  pumping  of  water 
for  hydraulicking,  the  practice  cannot  be  too  strongly 
condemned.  He  is  a  bold  man  who  attempts  it,  and  a 
singularly  fortunate  one  who  makes  a  financial  success 
of  it. 

Mr.  Stephen  Birch,  operating  in  the  Nizina  district  of 


difficulty  is  due,  not  only  to  the  exceedingly  gentle 
grades  of  the  streams,  but  also  to  the  shingly  character  of  the 
material  handled. 


GRAVEL-MINING  COSTS  321 

Alaska,  has  courteously  furnished,  for  this  report,  a  sum- 
mary of  the  costs  of  working  placer  ground  on  Dan  creek. 
These  figures  are  given  herewith,  as  they  imply  a  total 
charge  of  invested  capital,  in  addition  to  working  costs 
against  one  season's  operations. 

By  ground  sluicing  through  2O-in.  flume,  6,803  cu.  yd., 
$8,781.44,  or  $1.14  per  cubic  yard. 

By  use  of  8-in.  cotton-pressure  hose  and  nozzle, 
through  2O-in.  flume,  1,600  cu.  yd.,  $1,457.00,  or  $0.91 
per  cubic  yard. 

Use  of  pick  and  shovel  only,  through  lo-in.  sluice-box, 
2,320  cu.  yd.,  $5,100,  or  $1.87  per  cubic  yard. 

273-ft.  tunnel,  6  by  6  ft.,  timbered,  $1,017.00,  or  $3.72 
per  running  foot.  Or  407  cu.  yd.  of  gravel  removed, 
which  cost  $2.50  per  cubic  yard. 

Mr.  Birch  adds :  "While  the  cost  may  seem  high,  it  is 
because  of  the  fact  that  it  includes  the  tools  and  material 
now  on  hand,  which  were  necessary  to  remove  this  gravel. 
Now,  if  this  work  is  continued  for  a  number  of  years,  the 
depreciation  of  the  tools,  etc.,  could  be  charged  propor- 
tionately. These  prices  may  not  be  a  criterion  for  future 
operations  in  that  country,  but  were  our  first  cost  of  oper- 
ation, and  any  strangers  going  into  that  section  of  coun- 
try would  be  apt  to  run  up  their  costs  to  these  figures." 

The  cost  of  shoveling  into  sluice-boxes  in  the  remote 
parts  of  the  Seward  Peninsula  reaches  to  $5  per  cu.  yd., 
and  even  higher.  Some  drifting  operations  have  been 
carried  on  in  the  Kugrok  and  Fairhaven  districts,  on 
which  figures  are  not  at  hand. 

Dredging  estimates  furnished  by  reliable  interior  oper- 
ators place  the  cost  at  8oc.  per  cu.  yd.,  where  gravel  must 
be  thawed  by  points  ahead  of  the  dredge.  In  the  Seward 
Peninsula  it  is  estimated  that  if  the  property  is  sufficiently 
large  for  a  lo-year  life  to  be  allowed,  a  dredge  can  be 
operated  at  the  cost  of  3OC.  per  yd.  The  field  for  dredges 
in  placer  mining  in  Alaska  is  extremely  limited.  In 


322  THE  ECONOMICS  OF  MINING 

the  Seward  Peninsula  it  is  not  impossible  that  some  of 
the  wide,  shallow  creek  deposits  will  be  worked  success- 
fully by  means  of  the  steam  scraper.  The  cost  of  an 
experimental  operation  on  Ophir  creek  was  said  to  be 
under  2Oc.  per  yd. 

The  costs  of  operating  by  two  mechanical  systems,  in 
the  Seward  Peninsula  (involving  the  labor  of  men  in 
shoveling  into  cars  and  tramming,  in  the  one  case  to  the 
bottom  of  an  incline,  and  in  the  other  to  a  bedrock  sluice 
leading  to  hydraulic  elevator  throat),  are  unfortunately 
not  available  for  publication.  The  derricking  system, 
No.  7,  however,  both  in  the  interior  and  the  Seward 
Peninsula,  appears  to  be  superior  in  point  of  cost  to  either 
of  the  above  mentioned,  for  the  working  of  the  average 
Alaska  open-cuts. 

Frozen  ground  cannot  be  attacked  with  success  by  the 
steam-shovel.  Even  where  it  digs  the  gravel  successfully, 
if  men  follow  it  clean  to  bedrock  by  hand,  the  cost  of 
operating  is  sometimes  doubled.  The  steam-shovel  has, 
however,  a  field  in  northern  placer  mining. 

Regarding  mechanical  operations  in  general,  the  im- 
portant principle  should  be  emphasized  that  the  main  ex- 
pense is  getting  the  material  into  the  receptacle  which 
conveys  it  to  the  sluice  or  washing  plant.  Tramming, 
even  for  a  long  distance  and  to  a  considerable  elevation, 
adds  a  very  small  proportionate  amount  to  the  total  cost 
of  working.  The  establishment  of  a  permanent  washing 
plant,  economically  situated,  as  regards  water  supply  and 
dump,  should  be  considered  by  every  Alaskan  miner  who 
proposes  working  the  shallow  creek  deposits  which  char- 
acterize that  country.  The  isolation  of  the  washing  oper- 
ations, together  with  the  adoption  of  the  most  economical 
system  of  tramming  possible,  will  go  far  toward  attaining 
the  ends  of  adequate  grade  and  room  for  tailing,  which 
are  the  sine  qua  non  accompaniments  of  successful  gravel 
mining. 


THE  COST  OF  MINING 

(Editorial,   February   16,   1905.) 

On  another  page  we  publish  a  suggestive  contribution 
by  Mr.  W.  R.  Ingalls  on  the  cost  of  mining,  a  subject  of 
the  utmost  importance.  Whether  regarded  in  its  broad 
economic  aspect  as  implying  the  whole  process  of  winning 
the  metals,  or  in  the  narrower  sense  as  covering  only  the 
actual  breaking  of  ore,  the  question  is  one  which  must 
appeal  to  the  readers  of  this  JOURNAL  in  a  most  practical 
way.  Just  as  in  ordinary  life  it  is  a  proverb  that  money 
is  easier  to  make  than  to  keep,  so  in  mining  it  is  not  too 
much  to  say  that  the  finding  of  ore  requires  less  skill  than 
the  beneficiation  of  it ;  at  all  events,  the  haphazard  meth- 
ods of  the  one  must  ever  be  in  strong  contrast  to  the  log- 
ical ways  of  the  other.  The  subject  presents  many  as- 
pects, each  of  which  invites  discussion.  There  is  the  gen- 
eral question  of  the  attainable  minimum  of  expense  as 
affecting  the  world's  output  of  metals,  and  the  relation  of 
the  growing  rate  of  labor  to  the  increasing  application  of 
machinery ;  there  is  the  accountant's  and  director's  view 
of  the  portion  of  cost  properly  chargeable  to  mining,  with 
a  glance  back  at  the  days  when  development  was  charged 
to  capital  account,  and  perishable  machinery  to  assets. 
There  is  a  general  inquiry  into  the  conditions  which  cause 
costs  to  vary  within  such  wide  limits  in  different  mining 
regions,  and  the  pertinent  subject  of  the  factors  contribut- 
ing to  particularly  creditable  results  at  individual  mines. 
Finally,  there  comes  the  broad  problem  of  practice  under- 
ground, where  more  money  is  lost  or  saved  than  is  dreamt 
of  in  the  philosophy  of  the  average  investor.  These  are 
but  suggestions ;  our  own  views  will  find  expression  at  a 
later  date,  when  our  friends  will  have  given  a  good  start 
to  a  discussion,  the  obvious  usefulness  of  which  should 
elicit  a  widespread  expression  of  experience  and  opinion. 


THE  COST  OF  MINING 

BY  W.  R.  INGALLS. 

(February    16,    1905.) 

There  is  perhaps  no  subject  more  difficult  to  generalize. 
The  cost  of  mining  varies  according  to  conditions  in  a 
manner  so  obvious  as  to  require  no  antithetical  citations. 
There  can  be  no  question  as  to  what  constitutes  the  ulti- 
mate cost  of  mining,  but  opinions  differ  as  to  what  enters 
into  the  cost  during  a  limited  or  arbitrary  period,  such  as 
.the  fiscal  year;  in  other  words,  accounts  are  kept  in  vari- 
our  ways.  Many  other  difficulties  may  be  mentioned. 
Notwithstanding  all  these,  it  is  worth  while  to  attempt 
:some  generalizations,  making  due  allowance  for  the  vari- 
ables, since  it  is  only  through  such  deductions  that  we 
obtain  standards  for  comparison. 

The  determination  of  standards  would  be  useful  in  at 
least  three  ways :  ( I )  They  would  enable  the  mine  super- 
intendent to  know  if  his  work  were  being  done  as  cheaply 
as  it  ought  to  be  by  comparison  with  the  cost  of  similar 
work  elsewhere;  (2)  they  would  stimulate  efforts  to  re- 
duce expenses,  since  a  knowledge  of  the  cost  of  each  part 
of  the  work  indicates  the  direction  where  economy  can  be 
effected,  and  (3)  they  would  furnish  the  engineer  who 
has  to  value  mines,  especially  new  mines,  with  improved 
means  of  estimating  the  probable  cost  of  mining,  and 
therefore  the  net  value  of  the  ore.  The  cost  of  keeping 
accounts,  even  in  the  fullest  detail,  is  so  slight  that  there 
is  no  good  reason  why  they  should  not  be  kept  in  a  thor- 
oughly instructive  manner.  The  value  of  any  accounting 
is  greatly  diminished  if  it  be  not  so  systematized  as  to  give 
all  the  information  that  may  be  commercially  or  technic- 
ally required. 


THE  COST  OF  MINING  325 

At  the  present  time  there  is  a  great  lack  of  recorded  in- 
formation such  as  will  furnish  the  desired  guidance  to  the 
engineer.  It  is  a  frequent  practice  to  estimate  that  be- 
cause a  certain  orebody  is  being  mined  in  one  place  at  a 
certain  cost,  a  supposedly  similar  orebody  may  be  mined 
at  another  place  at  approximately  the  same  cost.  Such 
comparisons  are  useful  as  checks,  but  constitute  an  un- 
trustworthy basis  for  estimates,  unless  the  analogies  are 
thoroughly  demonstrated,  since  in  the  outcome  it  often 
happens  that  the  actual  cost  of  mining  proves  to  be  widely 
different  from  what  was  forecast,  because  of  peculiarities 
in  the  particular  orebody  and  its  occurrence  that  had  not 
been  taken  into  account. 

I  have  recently  had  occasion  to  examine  several  reports 
on  a  large  deposit  of  low-grade  ore  occurring  in  a  locality 
where  there  was  not  much  mining  precedent.  The  grade 
of  the  ore  was  low,  and  the  successful  exploitation  of  it 
depended  upon  a  large  tonnage  being  handled  at  a  close 
margin  of  profit.  It  was  a  case  where  the  probable  cost 
of  mining  should  have  been  estimated  with  the  utmost 
precision,  and  by  the  application  of  engineering  principles 
it  could  have  been  done.  The  mine  was  examined  by 
three  well  known  professional  men,  of  whom  two  at  least 
had  wide  experience  in  such  work.  The  cost  of  mining 
was  estimated  by  one  of  them  by  a  rather  far-fetched 
analogy ;  the  other  two  simply  expressed  the  .opinion  that 
it  would  probably  be  a  certain  amount  per  ton,  no  reasons 
being  given,  and  no  references  to  the  conditions  affecting 
the  cost.  The  estimates  of  mining  and  treating  the  ore 
were  certainly  at  fault  somewhere,  since  the  mine  proved 
unsuccessful. 

If,  in  estimating  the  cost  of  mining,  as  in  estimating  the 
cost  of  smelting  and  other  engineering  processes,  the  esti- 
mate be  divided  into  its  elements — the  probable  cost  of 
the  various  parts  of  the  work  that  go  to  make  up  the  total 
— peculiarities  affecting  the  total  cost  are  much  more  like- 


326  THE  ECONOMICS  OF  MINING 

ly  to  receive  critical  attention  than  when  a  lump  estimate 
is  made  without  any  analysis. 

The  presentation  of  a  detailed  estimate  in  a  report  on  a 
mining  proposition  is  a  good  deal  more  convincing,  espe- 
cially to  consulting  engineers,  to  whom  the  report  may  be 
submitted,  than  the  statement  of  a  single  figure  for  the 
total,  which  furnishes  no  evidence  as  to  its  accuracy,  and 
in  many  cases  can  be  pronounced  no  more  than  "prob- 
able" or  "improbable"  or  some  other  uncertain  character- 
ization. It  may  be  suggested  that  (in  view  of  the  numer- 
ous reports  that  are  circulated  without  any  information 
as  to  the  cost  of  mining,  cost  of  plant,  etc.,  wmch  it  is  nec- 
essary to  know  about,  leaving  it  to  the  investigator  to  de- 
termine those  factors)  we  should  be  grateful  for  what 
little  is  sometimes  offered,  and  so  we  are,  but  it  is  not  that 
class  of  mining  report  to  which  I  am  referring  in  this 
article. 

In  venturing  the  suggestion  that  it  is  possible  to  fore- 
cast the  probable  cost  of  mining  in  a  more  rational  man- 
ner, I  feel  sure  of  my  ground,  through  the  knowledge  that 
there  are  many  engineers  who  are  not  content  to  express 
inferential  opinions,  but  analyze  the  various  conditions 
that  affect  the  cost  of  stoping,  tramming,  hoisting,  timber- 
ing, pumping,  etc.,  and  that  there  are  such  technical  pa- 
pers as  that  of  Kinzie  on  the  mining  and  milling  methods 
at  Douglas  Island,  and  that  of  MacDonald  on  the  method 
and  cost  of  mine  timbering  at  Rossland,  and  many  others 
of  the  same  class,  which  go  thoroughly  and  lucidly  into 
the  engineering  conditions.  We  need  more  papers  of 
that  character  which  will  give  information  as  to  the  unit 
costs  under  numerous  and  various  conditions,  and  espe- 
cially the  unit  requirements  of  labor,  in  hours  of  work, 
and  material,  in  pounds,  tons  and  other  measures. 

In  making  analyses  of  costs  for  purposes  of  compari- 
son, it  is  essential  that  the  basis  for  itemization  shall  be  as 
nearly  uniform  as  possible.  Some  recently  published 


THE  COST  OF  MINING  327 

statements  have  permitted  the  following  tabulation, 
which,  though  admittedly  imperfect,  will  certainly  prove 
suggestive : 

Item.                                            A1                    B2  C3 

1.  Miners  and  helpers $0.35          $0.435  $0.429 

2.  Trammers,  shovelers,  etc 0.41            0.365  0.790 

3.  Drill   sharpening  and  repairs..      0.15            0.120  0.261 

4.  Compressed   air .'.            0.120  0.083 

5.  Maintenance  of  cars 0.03            0.090  0.038 

6.  Explosives   0.13            0.145  0.092 

7.  Timber    0.28            o.iio  0.205 

8.  Timbermen    0.23            0.190  0.067 

9.  Hoisting   0.23  0.190 

10.  Pumping o. 035  

11.  Supplies,  n.e.s.4 0.04           0.040  0.105 

12.  Supervision5 0.23            0.225  ? 

Total   $2.07          $2.065  $2.070 


1  Cripple  Creek,  Col.  (reported  by  J.  R.  Finlay). 

3  Centre  Star  Mine,  Rossland,  B.  C.  (official  report). 

3  Bunker  Hill  and  Sullivan,  Coeur  d'Alene  (official  report). 

*  Including  all  supplies  not  elsewhere  specified. 

"Including  bosses,  assaying,  surveying. 

The  above  classification  appears  to  me  quite  useful,  al- 
though for  thorough  comparison  we  ought  to  know  the 
rates  of  wages,  consumption  of  certain  material  (especially 
coal)  and  prices  of  the  principal  materials.  Items  i,  3,  4 
and  6  give  substantially  the  cost  of  breaking  down  the  ore ; 
items  2  and  5  the  cost  of  loading  the  ore  and  delivering 
to  the  shaft;  item  9  the  cost  of  hoisting  and  delivering 
at  the  surface;  items  7  and  8  the  cost  of  supporting  the 
ground,  and  item  10  the  cost  of  keeping  the  mine  dry. 
Each  of  these  steps  in  the  work  is  likely  to  vary  rather 
widely  in  different  mines.  The  ups  and  downs  may  offset 
each  other  and  make  the  totals  about  the  same,  as,  for  ex- 
ample, in  the  three  cases  given  above,  but  they  may  not. 

There  are  comparatively  few  mining  companies  which 
report  their  costs  with  the  above  detail.  Numerous  com- 
panies, however,  report  costs  itemized  as  follows:  I,  la- 
bor; 2,  coal;  3,  timber;  4,  explosives;  5,  other  supplies; 


328  THE  ECONOMICS  OF  MINING 

6,  supervision ;  7,  administration  and  general  expense. 
Such  a  statement  is  useful,  but  it  is  more  useful  if  the 
items  are  subdivided  according  to  the  various  branches  of 
the  work. 

In  considering  the  comparative  cost  of  mining,  the  fol- 
lowing are  some  of  the  essential  conditions  determining 
the  result  which  it  is  necessary  to  take  into  account: 

1.  Size  and  character  of  the  ore  deposit. 

2.  Method  of  mining,  (a)  open  cast,  (b)  underground. 
If  the  latter,  whether  room-and-pillar  system,  caving,  fill- 
ing, timbering,  or  a  combination  of  two  or  more.     The 
proportion  of  the  orebody  extracted  is  an  important  con- 
sideration.    The  system  of  breaking  the  ground,  the  lay- 
out of  the  mine,  the  method  of  handling  the  ore,  drainage, 
etc.,  are  determining  factors. 

3.  Depth  and  longitudinal  extent  of  the  workings.   In- 
crease in  depth  increases  the  cost  of  hoisting  and  pump- 
ing;  increase   in   longitudinal   and   lateral    direction   in- 
creases the  cost  of  tramming. 

4.  Character    and   amount   of   necessary    development 
work;  i.  e.,  the  work  that  must  be  done  to  discover  and 
give  access  to  the  ore.     The  amount  of  'dead  work'  that 
is  required  is  one  of  the  greatest  causes  of  variation  in  the 
cost  of  mining. 

5.  Quantity  of  water  to  be  raised  from  the  mine  and  the 
depth  from  which  it  must  be  lifted. 

6.  Quantity  of  coal,  dynamite,  timber,  steel,  etc.,  con- 
sumed per  ton  of  ore. 

7.  Wages  of  labor  of  various  kinds  and  its  quality. 

8.  Cost  per  ton  of  coal  and  its  quality. 

9.  Cost  per  pound  of  dynamite  (various  grades). 

10.  Cost  of  timber  per  1,000  ft.,  board  measure. 

11.  Tons  of  ore  mined  per  annum;  tons  of  shipping 
product  sorted  out ;  tons  of  waste  raised. 

12.  Supervision  and  administration. 

The  conditions  which  are  most  closely  comparable  are 


THE  COST  OF  MINING  329 

those  of  large  orebodies,  of  which  the  whole,  or  nearly  the 
whole,  is  extracted  and  sent  to  the  mill,  as,  for  example, 
those  of  Ducktown,  in  Tennessee;  Flat  River,  in  Mis- 
souri ;  Homestake,  in  South  Dakota,  and  the  copper  mines 
of  Lake  Superior.  In  the  case  of  narrower  veins,  like 
those  of  Cripple  Creek,  comparison  can  be  made  only  by 
considering  as  the  ore  all  the  material  that  has  to  be  taken 
out;  but  inasmuch  as  it  is  seldom  profitable  to  take  out 
more  than  enough  to  afford  working  room,  the  costs  in 
such  mines  are  necessarily  higher  than  in  those  wherein 
large  faces  of  ore  can  be  worked  in  great  chambers.  The 
lowest  cost  of  mining  ought  theoretically  to  be-  experi- 
enced in  large  deposits  of  ore  that  can  be  entirely  extract- 
ed as  suitable  for  milling  or  smelting,  and  can  be  opened 
by  drifts  of  large  size. 

Considered  commercially — and,  after  all,  mining  is  sim- 
ply a  commercial  business — the  true  cost  of  mining  is 
X  —  Y  =  A,  in  which  A  is  the  maximum  profit  realizable 
from  the  mine,  X  the  market  value  of  the  ore,  and  Y  the 
cost  of  mining,  including  all  outlay  for  plant  and  develop- 
ment work ;  but  it  is  only  in  rare  cases  that  advance  esti- 
mates can  be  reduced  to  these  elements.  However,  the 
cost  of  getting  to  the  ore  and  the  cost  of  plant  for  its  ex- 
traction are  certainly  factors  in  the  cost  of  mining;  this 
leads  to  the  much-discussed  question  as  to  how  the  ex- 
pense for  new  construction,  and  great  developments,  like 
new  shafts  or  adits,  should  be  charged  in  annual  state- 
ments of  mining  costs. 

It  should  be  recognized  clearly  that  any  useful  compari- 
son of  costs  can  be  made  only  in  the  light  of  analysis  of 
all  the  determining  conditions.  The  cost  of  mining  at  one 
place  may  be  $3  per  ton  and  at  another  place  only  $2,  yet 
the  'better  work  may  really  be  done  at  the  former.  In 
itemizing  the  various  elements  of  cost,  such  as  breaking 
ground,  shoveling  and  tramming,  explosives,  timbering, 
pumping,  etc.,  and  comparing  them,  we  shall  arrive  closer 


330  THE  ECONOMICS  OF  MINING 

to  the  actual  results,  but  we  shall  fail  to  get  at  the  truth 
unless  we  consider  the  proportion  of  the  orebody  ulti- 
mately won  and  the  final  profit  in  its  extraction.  Mr.  J. 
R.  Finlay  expresses  this  principle  so  clearly  in  discussing 
the  cost  of  mining  at  Cripple  Creek,  Col.,1  that  it  is  useful 
to  repeat  some  of  his  remarks.  He  says :  "A  low  cost  per 
ton,  either  of  'crude  rock  hoisted  or  of  sorted  ore  shipped, 
does  not  necessarily  indicate  either  good  mining  or  good 
management,  and  is  nearly  as  apt  to  indicate  the  contrary. 
Two  mines  may  be  working  in  exactly  the  same  kind  of 
ore,  and  one  may  ship  ore  at  more  than  twice  the  cost  for 
mining  that  the  other  does,  and  yet  be  doing  better  work 
and  making  larger  profits. 

"At  Cripple  Creek  the  ore  occurs  in  a  multitude  of 
small  veins,  either  single  or  in  aggregates.  In  the  small 
seams  which  constitute  either  the  vein  itself  or  a  compo- 
nent part  of  it,  the  ore  is  rich,  but  the  rock  on  the  walls,  or 
between  the  seams,  is  either  wholly  or  partly  waste.  The 
rich  seams  may  vary  in  thickness  from  a  mere  crack  to  a 
foot  or  two ;  and  fpr  these  widths,  it  may  carry  from  one 
to  several  hundred  ounces  gold  per  ton. 

"There  are  no  large  orebodies  in  Cripple  Creek.  It  is 
doubtful  if  any  single  orebody,  or  even  any  single  vein, 
has  produced  100,000  tons  of  shipping  ore.  The  largest  and 
best  veins  have  been  found  in  the  granite,  where  the  rock- 
walls  themselves  are  sometimes  uniformly  impregnated 
with  value  for  a  width  of  30  or  40  ft.  In  such  places 
large  amounts  of  clean  ore  have  been  mined  and  shipped 
without  sorting,  but  only  in  the  swells ;  when  the  vein 
narrows  down  it  is  always  necessary  to  break  some  waste 
in  order  to  make  room  to  work. 

"The  ore,  therefore,  is  mined  from  veins  of  such  a 
character  that  it  is  impossible  to  get  it  out  without  mixing 
with  some  worthless  rock.  The  problem  of  handling  this 

1  THE  ENGINEERING  AND  MINING  JOURNAL,  November  21,  1903. 


THE  COST  OF  MINING  331 

ore  economically  depends  on  the  cost  of  treatment.  This 
cost  is  at  present — and  is  likely  to  be  always — so  high  that 
it  becomes  very  essential  to  throw  out  as  much  waste,  or 
low-grade  ore,  as  possible  before  shipping.  Could  the  ore 
be  treated  for  a  dollar  or  two  a  ton,  the  proposition  would 
be  entirely  different." 

The  ore  shipped  from  Cripple  Creek  is  a  concentrate 
produced  by  hand  sorting.  Numerous  mines  in  other  dis- 
tricts are  operated  under  similar  conditions.  Even  at 
Lake  Superior  a  considerable  proportion  of  barren  and 
lean  rock  is  sorted  out  of  the  rock  hoisted,  in  order  to 
effect  a  preliminary  concentration  of  the  ore  before  send- 
ing it  to  the  stamp  mills.  This  leads  to  a  consideration  of 
the  point  where  mining  leaves  off  and  ore-dressing  be- 
gins. Probably  there  will  be  no  disagreement  that  sorting 
practiced  on  the  surface  is  technically  a  process  of  ore- 
dressing,  but  sorting  is  also  done  underground,  and  while 
that  might  also  be  technically  considered  a  process  of  ore- 
dressing,  it  would  be  highly  impracticable  in  book-keeping 
to  distinguish  between  it  and  mining. 

These  features  indicate  some  of  the  difficulties  in  re- 
ducing the  cost  of  mining  under  various  conditions  to  any 
sound  basis  of  comparison.  Unquestionably,  however,  an 
analysis  of  the  elements  of  cost  would  bring  us  nearer  to 
such  a  basis,  and  an  examination  of  the  costs,  as  officially 
reported  by  various  mining  companies,  will  show  the  de- 
sirability of  such  an  analysis.  It  is,  for  example,  difficult 
for  anyone  not  familiar  with  the  special  conditions  to 
understand  why  the  cost  of  extracting  a  ton  of  ore  from  a 
great,  well-equipped  mine  like  the  Anaconda  should  be 
$3.50  per  ton,  when  ore  is  mined  for  $2  per  ton  at  Cripple 
Creek,  Col.  Anyone  examining  the  reports  of  the  Lake 
Superior  copper  companies  is  naturally  led  to  inquire  why 
the  cost  of  mining  in  the  Atlantic  is  only  QOC.  per  ton,  and 
in  some  other  mines  of  the  same  district  twice  as  much. 
Another  interesting  question  would  naturally  arise  as  to 


332  THE  ECONOMICS  OF  MINING 

why  mining  can  be  done  with  insignificant  equipment  and 
so  cheaply  as  it  has  been  in  the  Joplin  district  of  Mis- 
souri. 

It  is  hoped  that  a  discussion  of  these  questions  and 
others  of  the  same  character  will  be  taken  up  in  further 
contributions. 


THE  COST  OF  MINING 

(February   23,    1905.) 

The  Editor: 

SIR — As  Mr.  Ingalls  begins  by  saying  in  his  recent  arti- 
cle, the  matter  of  the  proper  cost  for  mining  is  a  hard  sub- 
ject to  generalize,  but  I  am  of  the  impression  that,  if  more 
companies  published  their  costs  in  proper  detail,  the  diffi- 
culty of  generalization  would  be  much  less,  because  even 
in  cases  of  wide  difference  of  conditions,  there  would  still 
be  found  operations  in  which  the  conditions  were  more 
or  less  parallel.  I  have  amused  myself  in  comparing  cer- 
tain items  of  cost  at  the  Treadwell  mine  in  Alaska,  as 
published  by  Mr.  Kinzie,  and  those  of  the  Portland 
mine  at  Cripple  Creek.  At  first  glance  one  might  say 
that  in  no  two  places  could  the  conditions  be  more  dis- 
similar— the  Treadwell,  with  its  immense  bodies  of  uni- 
form ore,  mined  very  rapidly  with  comparatively  small 
outlay  for  exploration  and  development,  and  the  Port- 
land, with  its  aggregate  of  more  or  less  scattered  and  small 
orebodies  requiring  for  exploitation  a  large  amount  of 
development  work,  done  to  a  considerable  extent  at  ran- 
dom. Nevertheless,  I  find  that  there  are  certain  opera- 
tions at  the  Portland  that  find  a  parallel  in  the  Tread- 
well,  and  in  these  cases  it  is  worth  noting  how  well  the 
Cripple  Creek  property  will  compare.  Mr.  Kinzie  gives 
the  tonnage  broken  per  machine  shift  in  underground 
stopes  of  the  Treadwell  at  34.96.  He  does  not  state 
whether  this  is  tonnage  removed  from  the  stopes  or  the 
actual  tonnage  broken,  it  being  understood  that  in  the 
underground  part  of  the  Treadwell  mine  about  one-half 
of  the  ore  broken  is  left  in  the  stopes  until  they  are 
worked  through.  In  case  the  tonnage  referred  to  is  the 
actual  breakage  record  of  the  machines,  the  performance 
is  almost  identical  in  cost  with  that  in  the  wide  stopes 


334  THE  ECONOMICS  OF  MINING 

at  the  Portland  mine.     The  table  below  gives  the  com- 
parison. 

At  the  Portland,  small  machines,  2\  in.,  operated  by 
one  man  at  $4.00,  are  used;  at  the  Treadwell,  3f-in. 
machines,  using  2.15  times  as  much  air  at  the  same  pis- 
ton speed  as  the  Portland  machines,  and  operated  by 
two  men  at  $7.87  per  day. 

Portland.       Treadwell. 

Tons  per  machine  in  all  stopes 12.4  34-96 

Tons  in  wide  stopes 17.7*  t34.g6 

Tons  per  machine  in  drifts 5.3  9.6 

Tons  per  foot  in  drifts 2.5  7 

Labor  cost  per  ton  on  ore  broken  in  large  Cents.  Cents. 

stopes 22.6  22.5 

Labor  cost  per  ton  broken  in  drifts 75       .  82 

Labor    cost    per    foot   of    drift    for    machine 

drilling  ' 1.86  5.75 

*  One-man  machines,     t  Two-men  machines. 

In  the  above  cases  the  comparison  is  not  unfavorable 
to  the  Cripple  Creek  property,  the  development  work 
being  much  cheaper  at  Cripple  Creek  than  at  the  Tread- 
well,  but  in  this  particular  the  cases  are  not  parallel. 
Development  work  in  the  Treadwell  means  large  open- 
ings designed  for  the  extraction  of  heavy  tonnage.  At 
Cripple  Creek  the  primary  object  of  development  work 
is  to  discover  ore,  and  consequently  the  drifting  and 
cross-cutting  are  designed  to  be  driven  with  the  greatest 
speed  and  the  least  expense,  regardless  of  the  future 
utility  of  the  work  for  mining  purposes. 

The  result  of  this  difference  in  design  of  development 
work  shows  in  the  cost  of  tramming,  which  is  over  2oc. 
per  ton  at  the  Portland,  as  against  a  trifle  over  3c.  at  the 
Treadwell.  Twenty  cents  per  ton  is  about  the  least  that 
the  tramming  can  be  done  for  in  Cripple  Creek  under 
the  present  plan  in  mining  operations.  It  is  not  prac- 
ticable to  introduce  haulage  systems  underground  on  ac- 
count of  the  small,  scattered  orebodies  connected  by 
crooked  drifts.  It  is  hard  to  see  how  any  other  arrange- 


THE  COST  OF  MINING  335 

ment  than  the  present  would  apply.  Therefore,  the  dif- 
ference of  cost  of  tramming  between  the  Portland  mine 
and  the  Treadwell  is  sufficiently  accounted  for  by  the 
radical  difference  of  conditions. 

Another  expense  at  the  Portland  is  timbering,  which 
averaged  for  six  months  almost  exactly  5oc.  per  ton. 
At  the  Treadwell  this  expense  is  practically  zero.  This 
is  a  point  in  which  the  practice  at  the  Portland  mine 
might  be  open  to  criticism,  because  other  mines  in  Crip- 
ple Creek  succeed  in  extracting  their  ore  with  almost  as 
small  expense  for  timber  as  the  Treadwell.  Neverthe- 
less, as  I  have  attempted  to  point  out  in  one  or  two 
former  communications,  the  problem  is  not  one  of  mere 
cost  per  ton,  but  that  of  mining  the  value  at  the  least 
cost  from  a  profit-making  point  of  view,  and  in  my  judg- 
ment the  timbering  cost  at  the  Portland  is  fully  justified 
by  the  conditions. 

Again,  the  cost  of  ore-sorting  at  the  Portland  is  about 
three  times  as  much  as  that  of  milling  and  concentrating 
at  the  Treadwell.  Here  again  the  difference  of  cost  is 
justified  by  a  difference  of  conditions  so  obvious  as 
scarcely  to  merit  discussion. 

The  cost  of  hoisting  at  the  Portland  is  about  22C.  per 
ton,  as  against  about  nc.  for  the  Ready  Bullion  and 
Alaska  Mexican,  which  handle  about  the  same  tonnage. 
This  difference  is  one  which  should  not  exist,  and  is  ac- 
counted for  largely  by  the  bad  design  of  almost  all  Crip- 
ple Creek  hoisting  plants.  There  is  no  reason  why  Cripple 
Creek  ores  should  not  be  hoisted  by  skips  and  dumped 
directly  into  ore-bins,  as  is  done  at  the  Treadwell,  there- 
by doing  away  with  the  expense  of  top-tramming,  which 
in  Cripple  Creek  is  invariably  a  large  item. 

I  am  giving  the  above  comparisons  largely  because 
they  are  interesting  in  themselves,  and  partly  to  show 
that  if  the  proper  details  were  given,  there  is  a  legiti- 
mate comparison  that  can  be  made  between  mines  even 


336  THE  ECONOMICS  OF  MINING 

of  great  apparent  difference  in  character.  The  publi- 
cation of  costs  would  be  of  advantage  to  many,  probably 
most,  mining  companies,  because  by  so  doing  they 
would  bring  to  light  certain  deficiencies  in  their  own 
management,  which  would,  in  course  of  time,  be  pointed 
out  to  them.  Many  companies  are  deluded  into  think- 
ing that  their  superintendents  are  good  mining  men, 
simply  because  they  have  been  on  the  property  a  long 
time. 

Taken  in  the  large,  the  discussion  of  mining  costs  will 
merge  into  that  provoked  by  Mr.  Hoover's  article  on 
mine  equipment  and  ore  reserves.  Most  competent 
mine  managers  will  probably  agree  with  Mr.  Hoover 
that  the  problem  is,  to  extract  and  market  the  entire 
deposit  constituting  a  mine  at  the  greatest  profit  to  the 
stockholder.  They  will  fully  agree  with  him  on  the 
economy,  not  only  of  providing  abundant  equipment  for 
the  rather  speedy  working  of  visible  ore  supplies,  but 
also  of  working  that  equipment  to  its  utmost  capacity. 
The  consideration  of  such  subjects  is  the  consideration 
of  mining  costs  in  the  widest  sense.  The  problem  of 
deciding  upon  the  best  methods,  the  proper  scale  of  op- 
erations and  the  most  desirable  cost  to  be  aimed  at,  is 
one  big  enough  for  the  best  business  intelligence  a  min- 
ing engineer  can  muster.  Unfortunately,  too  many 
engineers  confine  their  attention  too  much  to  technical 
subjects,  and  the  owners  of  large  enterprises  often  find 
it  necessary  to  leave  them  out  of  consideration  in  the 
decision  of  the  broader  aspects  of  the  business. 

Ability  to  see  things  in  their  proper  proportions  and 
to  lay  strong  hold  of  the  essential  features  of  an  enter- 
prise are  more  vital  to  the  success  of  a  manager  than  all 
other  qualities  combined,  and  are  more  necessary  at  the 
beginning  of  an  enterprise  than  at  any  other  time.  It 
is,  indeed,  rare  that  a  good  mine  is  absolutely  spoiled, 
but  nothing  is  more  common  than  to  see  mines  worked 


THE  COST  OF  MINING  337 

out  under  such  handicaps  of  bad  management  that  they 
fall  enormously  short  of  producing  their  just  profits. 
This  bad  management  is  just  as  apt  to  be  the  result  of 
some  mistake  in  general  principles,  such  as  methods  of 
mining,  design  and  scope  of  plant,  as  from  failure  to 
work  out  everyday  details.  Mistakes  due  to  failure  to 
comprehend  the  structure  and  capabilities  of  the  ore- 
bodies  are  extremely  common,  and  I  have  seen  mines 
brought  to  the  verge  of  ruin  by  such  mistakes. 

It  is  only  when  the  salient  features  of  an  enterprise 
have  been  worked  out  and  decided  on,  that  one  is  justi- 
fied in  figuring  on  the  details  of  cost.  For  instance,  one 
can  scarcely  estimate  how  much  it  will  cost  to  hoist  a 
ton  of  rock  until  he  knows  what  kind  of  an  engine  he 
is  going  to  have,  as  well  as  the  appliances  used  in  load- 
ing and  dumping,  etc.  If  his  tonnage  is  small  and  un- 
certain, he  will  probably  prefer  not  to  put  in  skips  with 
underground  loading-pockets,  but  will  use  light  engines, 
small  cages  or  buckets.  Thereby  he  will  save  a  portion 
of  his  plant  investment  at  the  expense  of  a  higher  cost 
in  daily  manipulation.  If  you  are  able  to  hoist  only  40 
tons  a  day,  you  will  still  be  compelled  to  employ  two 
engineers  at  $4  a  day,  and  your  hoisting  will  cost  2oc.  a 
ton  for  engineers'  labor  alone.  Circumstances  may  be 
such  that  a  hoisting  cost  of  4oc.  a  ton  will  be  just  as 
good  practice  at  one  place  as  4c.  a  ton  at  another  place. 
The  thoroughly  competent  engineer  will  see  the  folly  of 
working  on  unjustifiable  economies.  If  a  man  really  ex- 
pects to  hoist  only  10,000  tons  altogether,  he  will  be  a 
better  engineer  to  get  all  that  rock  out  with  a  windlass 
at  $i  a  ton  than  to  buy  a  $10,000  hoist  in  order  to  get  it 
up  for  loc.  a  ton. 

The  same  kind  of  reasoning  applies,  in  many  ways,  to 
a  variety  of  items  that  make  up  mining  costs.  For  ex- 
ample, a  man  may  be  doing  excellent  drifting,  but  he 
may  do  so  much  of  it  that  it  may  appear  as  a  large  item 


338  THE  ECONOMICS  OF  MINING 

in  his  cost  of  ore.  Very  likely  he  ought  to  receive  praise 
for  his  good  drifting,  instead  of  blame  for  his  high  cost 
per  ton. 

It  seems  to  me,  therefore,  that  the  costs  that  afford 
most  interesting  comparisons  and  are  most  easy  to  ob- 
tain, are  those  which  apply  to  such  things  as  drifting, 
shaft-sinking,  shoveling,  machine  drilling,  etc.,  etc.;  in 
fact,  just  such  details  as  Mr.  Kinzie  gives  in  his  paper 
on  the  Treadwell.  When  costs  on  these  things  are  cor- 
rectly stated,  with  information  regarding  the  conditions 
of  working  (such  as  ventilation,  water,  kind  of  rock, 
manner  and  method  of  working),  they  become  valuable. 
It  would  probably  be  amazing  to  see  the  difference 
between  mines  in  the  same  district,  working  under  iden- 
tical conditions.  These  costs,  therefore,  and  not  the 
total  costs,  are  those  that  might  be  given  publicity  with- 
out harm  to  the  mining  companies,  and  more  often  to 
their  great  advantage. 

J.   R.   FlNLAY. 

Colorado  Springs,  Feb.  19,  1905. 


MINE  RESERVES 

(March    2,    1905.) 

The  Editor: 

SIR — When  I  wrote  you,  early  last  year,  asking  for 
an  expression  of  opinion  as  to  the  wisdom  of  the  prac- 
tice of  keeping  a  reserve  of  gold  or  bullion  at  a  mine,  it 
was  because  I  had  a  premonition  that  the  question 
would  have  to  be  settled  in  Western  Australia  sooner  or 
later.  The  Boulder  Perseverance  scandal  has  brought 
the  matter  to  a  head  in  that  State,  just  as  the  matter 
had  been  fought  out  earlier  in  the  smaller  companies  in 
Victoria.  When  writing  to  you,  the  point  that  was  put 
was  that  the  practice  was  bad,  inherently  bad,  inasmuch 
as  it  gave  great  opening  for  fraud.  Nothing  has  oc- 
curred to  shake  that  opinion. 

If  the  evidence  of  the  leading  Kalgoorlie  mine  man- 
agers, given  before  the  Boulder  Perseverance  Commis- 
sion, in  favor  of  the  retaining  of  a  reserve  at  the  mine, 
is  analyzed,  it  will  be  found  that  the  chief  reason  ad- 
duced in  support  is  that  the  share  market  must  be  kept 
level  by  having  level  yields.  The  members  of  the  royal 
commission  were  so  impressed  by  this  contention  that 
in  their  rinding  they  adopt  the  views  put  forward  by 
the  mine  managers.  Still,  is  it  in  any  sense  the  duty 
of  the  mine  manager  to  consider  the  share  market?  If 
he  does,  is  there  not  always  the  risk  that  he  will  take  a 
hand  in  it?  With  men  receiving  the  regal  salaries  earned 
by  the  managers  of  the  big  Kalgoorlie  mines,  there 
ought  not  to  be  any  temptation  to  go  astray  by  using 
the  knowledge  they  obtain  in  their  official  position  to 
speculate  in  their  company's  shares.  But  the  history  of 
Kalgoorlie  mining  is  such  as  to  enforce  the  conviction 
that,  not  only  have  wrong  estimates  of  the  value  of  the 
ore  been  given,  but  also  that  bullion  reserves  have  been 
used  to  assist  in  market  operations.  With  smaller  com- 


340  THE  ECONOMICS  OF  MINING 

panics,  where  salaries  are  low,  how  much  greater  must 
be  the  temptation  to  men  to  try  to  make  themselves 
financially  secure  by  manipulating  the  bullion  reserve. 
But  does  the  existence  of  a  gold  reserve  protect  shares 
from  fluctuations?  Victorian  experience  says  No.  The 
grade  of  the  ore  falls  off  and  the  yield  is  kept  up  by  the 
assistance  of  the  gold  reserve.  No  one,  ostensibly, 
knows  of  the  true  state  of  affairs,  except  the  manager 
and  the  directors — when  the  latter  are  kept  posted  as  to 
the  reserve — or  the  manager  alone,  and  perhaps  one  of 
his  trusted  officials.  Yet  the  market  soon  shows  signs 
that  something  is  wrong,  although  the  yields  have  kept 
up  to  their  average.  Some  one  invariably  learns  of  the 
changed  circumstances  of  the  property,  and  he  gets  rich 
at  the  expense  of  others.  Is  this  good  for  the  industry? 
It  may  be  said  that  a  study  of  the  assay  plans  will  con- 
vey the  fact  of  the  falling  off  in  the  grade  of  ore.  But 
we  in  Victoria  do  not  have  assay  plans,  and  even  if  we 
had,  the  ordinary  shareholder,  like  the  mine  manager, 
hopes  that  pay-dirt  may  again  be  entered.  As  it  is,  how- 
ever, the  practice  of  keeping  gold  reserves  has  been 
practically  abandoned  here.  And  it  is  an  answer  to 
those  who  think  that  stocks  would  depreciate  if  yields 
were  to  fluctuate,  that  some  of  the  most  stable  shares  in 
the  bullion  market  are  those  where  no  gold  reserve  is 
maintained.  Shareholders  are  educated  to  know  that 
they  must  expect  variations  in  yield.  All  they  want  to 
be  told  is,  that  the  mine  is  opened  up  well  ahead  of  the 
picks,  and  that  the  average  value  of  the  dirt  is  main- 
tained. Then  they  are  not  alarmed  by  poor  patches. 

One  point  touched  upon  in  the  evidence  given  before 
the  royal  commission  deserves  attention.  Managers 
stated  that  they  would  not  tell  a  shareholder  the  amount 
of  the  reserve  if  he  made  an  inquiry  on  the  point.  The 
Victorian  Companies  Act  provides  that  in  a  mining 
company  a  shareholder  or  a  creditor  can  demand,  and 


MINE  RESERVES  341 

must  be  supplied  with,  three  months'  accounts  from  the 
board.  Just  see  the  position  the  directors  would  be  in  if, 
while  telling  that  the  debts  were  so  much  and  the  assets 
so  much,  they  omitted  to  state  that  there  were  so  many 
ounces  of  gold  held  in  reserve.  Should  the  shareholder 
sell  on  the  statement  and  the  scrip  rise,  he  could  recover 
against  them  for  furnishing  a  false  return.  If  he  held, 
and  shares  declined,  he  would  still  be  in  the  same  strong- 
position.  It  is  the  duty  of  the  directors  to  know  if  a 
gold  reserve  exists,  and  still  more  is  it  their  duty  to 
know  how  it  is  used.  With  this  information  in  their 
hands,  they  have  no  right  to  refuse  to  tell  a  partner — 
that  is,  a  fellow  shareholder — how  the  reserve  stands. 

Only  under  certain  conditions  can  a  gold  reserve 
at  a  mine  owned  by  a  company  be  justified,  (i)  That  it 
shall  be  kept  with  the  full  knowledge  and  consent  of  the 
shareholders.  (2)  That  every  monthly  yield  shall  be  re- 
corded truthfully — say,  10,000  tons  for  8,250  oz.;  taken 
from  reserve,  1,750  oz.;  total  return,  10,000  oz.,  if  the 
average  to  be  kept  up  is  an  ounce.  (3)  That  the  extent 
of  the  reserve  then  started  shall  be  disclosed;  and  (4) 
that  every  month  the  withdrawals  from  it,  or  the  addi- 
tions to  it,  shall  be  stated.  Then  the  ordinary  shareholder 
will  know  how  he  stands,  and  as  he  is  the  backbone  of 
the  industry,  it  is  to  everyone's  interest  that  he  shall  not 
be  deceived,  and  so  be  led  to  withdraw  his  support  from 

!t-  F.  H.  BATHURST. 

Melbourne,  Victoria,  Jan.  21,  1905. 


THE  COST  OF  MINING 

(March   9,    1905.") 

The  Editor: 

SIR— Mr.  Ingalls'  timely  article  on  the  above  subject 
calls  attention,  not  only  to  the  desirability  of  uniform 
methods  of  keeping  mine  costs,  but  also  to  the  publica- 
tion of  itemized  statements  of  costs.  On  the  latter  point 
there  is  much  difference  of  opinion. 

There  should  be  no  difference  of  opinion  regarding 
which  enters  into  the  cost  of  mining.  Nothing  short  of 
the  total  cost  can  be  correct,  and  anything  less  is,  to  say 
the  least,  misleading.  No  matter  how  the  costs  may  be 
divided  up  or  distributed,  the  net  profit  per  ton  deducted 
from  the  market  value  equals  the  cost  of  mining,  or,  as 
Mr.  Ingalls  puts  it,  X  —  Y  =  A. 

The  tabulated  costs  quoted  by  Mr.  Ingalls,  and  ad- 
mitted imperfect,  are  simply  ex  parte  statements.  No 
charge  is  shown  for  maintenance  of  plant,  taxes,  insur- 
ance and  many  other  items  of  substantial  expense  in- 
separable from  ordinary  mining  operations. 

Here  is  a  more  complete  statement,  taken  from  the 
balance  sheet  of  another  Cripple  Creek  property  (Mining 
Reporter,  December  8,  1904),  and  which,  I  presume,  rep- 
resents English  methods: 

Cost  for  Year  Ending  June  30,  1904. 

Blocking  out  ore,  etc $4. 131 

Ore  breaking 5. 182 

Timbering    0.744 

Pumping 0.933 

Hoisting  and  tramming 1 .469 

Ore  sorting  and  loading 0.608 

General   lighting 0. 112 

Surveying   0.080 

Mine  sampling 0.066 

Wages  of  foreman,  etc 0.265 

Watchman o.  134 

$13-7240 


THE  COST  OF  MINING  343 

Repairs  and  improvements  to  buildings  and  plants $0.2896 

Shipping  and  selling  ore,  sampling  and  assaying o.  1793 

Salaries  of  consulting  engineer  and  manager 0.8923 

Salaries  of  clerks 0.0323 

Auditing  fees  and  expenses 0.0244 

Assay   plans o .  0364 

Traveling   expenses o .  0050 

Exploitation  expenses * o .  0770 

Insurance   o.  1494 

Taxes    (less   adjustment) o.  1693 

Compensation,  etc.,  cage  accidents 0.2502 

Strike  expenses 0.0875 

Legal   expenses 0.0252 

Loss  on  cottages o.ouo 

Miscellaneous 0.0730 

Total    $2.310 

Freight  and  treatment  on  43,758  tons $7-743 

London  office  expenses,  including  $5,178.80  for  a  special 

report  on  the  mine 0.513 


Total  cost $24.290 

A  good  system  of  cost  keeping,  not  necessarily  an 
elaborate  one,  is  an  essential  requirement  of  any  well- 
managed  mine,  nevertheless  it  is  very  often,  through 
faulty  methods  or  tediously  minute  classifications,  a  mat- 
ter of  considerable  expense.  When  the  ordinary  shift 
bosses  are  overloaded  with  cost  keeping  or  cost  dis- 
tribution methods  the  general  work  suffers,  and  the  cost 
of  breaking  rock  goes  up,  as  it  were,  in  an  effort  to  keep 
it  down.  In  other  words,  while  the  foremen  or  bosses 
are  endeavoring  to  find  out  how  many  nails,  caps  and 
candles  are  consumed  in  breaking  a  ton  of  rock  in  one 
stope,  the  men  may  be  idling  in  another. 

The  minute  elaboration  of  mine  costs  is  largely  acad- 
emic— the  result,  perhaps,  of  autocratic  mine  manage- 
ment with  fledgelings  instead  of  experienced  birds  in 
charge  of  the  operations.  The  autocrat,  seated  in  his 
office  chair  at  some  financial  center,  in  his  endeavor  to 
direct  the  operation  of  some  score  or  more  mines,  often 
attaches  undue  importance  to  mere  items  of  cost  (which 
are  seldom  strictly  comparable  for  any  two  mines)  and 


344  THE  ECONOMICS  OF  MINING 

pays  little  if  any  attention  to  the  practical  mining  ability 
of  those  in  charge  of  the  operations.  Should  not  the 
ability  to  discover  ore,  or  even  not  to  lose  it,  when 
discovered,  rank  fully  as  high  as  mere  cost  of  produc- 
tion? The  most  elaborate  cost  system  ever  devised  will 
never  successfully  displace  mining  skill  acquired  by 
years  of  close,  intelligent  observation  and  experience 
in  actual  mining  work.  I  have  known  mines  where  the 
cost  of  producing  and  milling  or  marketing  a  ton'  of 
ore  was  steadily  lowered  by  one  expedient  or  another; 
but  somehow,  before  the  total  cost  reached  a  minus 
quantity  profits  vanished,  the  stockholders  kicked,  or 
something  else  happened,  a  strike,  like  as  not,  and  the 
mine  was  eventually  leased,  with  results  entirely  satis- 
factory to  the  stockholders. 

We  have,  here  in  Colorado,  scores  of  cases  where 
lessees  (practical  and  experienced  miners)  have  taken  up 
unprofitable  and  practically  abandoned  mines,  made 
them  pay  handsomely,  and  turned  them  over  at  the 
expiration  of  their  leases  in  condition  where  even  the 
Rodomont  autocrat  could  for  some  time  work  them 
profitably  from  his  observation  point,  perhaps  thousands 
of  miles  distant  from  the  field  of  operation.  Now, 
lessees  do  not  depend  on  any  elaboration  of  mining  costs 
to  secure  these  results,  but  rely  almost  entirely  on  their 
ability  as  miners  and  on  their  practical  experience,  which 
has  taught  them  that  mining  is  the  art  of  making  money 
from  ore  deposits;  that  the  cost  per  ton  is  only  one 
factor;  and  that  breaking  the  ore  as  free  as  possible 
from  waste,  and  properly  sorting  it,  is  often  of  more  im- 
portance, for  the  reason  that,  while  it  increases  the  cost 
of  raising  a  ton  of  ore,  it  also  increases  the  net  profit  of 
the  operation,  which  should  be  the  objective  point  in 
mining.  Therefore,  I  hold,  the  successful  miner  in  any 
given  mine  is  he  who  returns  the  largest  percentage  of 
profit  from  the  gross  'value  of  the  ore,  not  necessarily 


THE  COST  OF  MINING.  345 

the  one  who  can  show  the  lowest  mining  cost.  To  reach 
this  desirable  condition,  the  cost  of  milling  or  smelting 
must  be  studied,  together  with  the  cost  of  the  actual  min- 
ing and  sorting  or  dressing  of  the  ore;  hence  these 
charges,  very  properly  grouped  separately  in  the  itemized 
costs,  are  brought  together  to  form  the  total  mining  cost 
as  previously  defined. 

I  favor  a  simple  system  of  cost  keeping,  where  the  dis- 
tribution of  supplies,  etc.,  is  made  direct  from  the  mine 
store,  on  the  orders  of  the  superintendent  or  shift  bosses, 
and  they  are  charged  at  once  to  the  particular  place  or 
work  indicated. 

The  general  subdivisions  of  mine  costs  that  suggest 
themselves  are:  (i)  Winning  (blocking  out  ore),  (2) 
stoping  the  ore,  (3)  dressing  or  milling  or  smelting  the 
ore,  the  sum  of  these  being  the  entire  cost  of  producing 
and  disposing  of  one  ton  of  ore,  provided  always,  the 
amount  won  during  the  period  under  review  equals  the 
amount  of  ore  stoped,  otherwise  corrections  must  be 
made  for  increased  or  decreased  ore  reserves ;  or,  at  least, 
the  condition  of  the  ore  reserves  should  be  clearly  stated. 
The  average  stockholder  is  satisfied  with  the  totals  as 
above,  together  with  the  value  of  the  ore  and  profit  per 
ton,  or  the  usual  balance  sheet  and  profit  and  loss  state- 
ment. Then  why  bewilder  him  with  itemized  statements 
of  costs?  Useful  and  indispensable  though  they  may  be 
to  the  management,  they  are  as  invariably  useless  to 
stockholders. 

The  matter  of  publishing  itemized  mining  costs  is  one 
that  mining  companies  do  not,  as  a  rule,  approve.  As 
the  president  of  a  large  company  once  said  to  me,  "It  is 
our  private  business,  and  why  should  we  give  it  to  the 
world  to  satisfy  the  curious,  or  help  educate  young  min- 
ing engineers  who  have  not  had  practical  experience 
along  those  lines,  or  to  furnish  ammunition  for  the  stock- 
holders to  make  erroneous  comparisons  between  two 


346  THE  ECONOMICS  OF  MINING 

mines  of  perhaps  very  different  type?"  Throughout  the 
Rocky  Mountain  region  the  average  mining  companies 
have  dealings  with  the  railways  and  smelters  in  marketing 
their  ores,  and,  rightly  or  wrongly,  very  often  believe  that 
these  corporations  are  anxious  to  secure  as  high  a  tariff 
as  they  believe  the  ore  will  stand;  and  so,  in  places  as 
far  apart  as  British  Columbia  and  the  San  Juan,  and 
once  in  Old  Mexico,  I  have  at  various  times  heard  mine- 
owners  say  something  like  this :  "Why  should  we  pub- 
lish the  itemized  costs  of  producing  a  ton  of  marketable 
ore?  Neither  the  railroads  nor  the  smelters  publish 
itemized  costs  for  hauling  or  for  smelting  a  ton  of  ore, 
and,  furthermore,  we  do  not  believe  that  it  costs  the  rail- 
way corporations  any  more  to  haul  a  ton  of  $50  ore  than 
it  would  to  move  a  ton  of  $15  ore  over  the  same  distance, 
and  yet  the  charge  is  often  double.  And  so  with  the 
smelters,  the  charges  on  some  ores  are  based  simply  on 
their  precious  metal  value." 

A  full  discussion  of  the  various  methods  of  classifying 
mine  costs  may,  and  I  hope  will,  result  in  the  gradual 
adoption  of  a  uniform  system,  from  which  tentative  com- 
parisons can  readily  be  made  between  mines  of  similar 
type,  etc. ;  but  under  the  present  economic  conditions  that 
obtain  in  the  West,  the  great  majority  of  mining  com- 
panies will,  as  now,  refrain  from  publishing  itemized 
statements  of  costs.  pHJLIp  ARQALL 

Denver,  December  12,  1904. 


THE  COST  OF  MINING 

(March    23,    1905.) 

The  Editor: 

SIR — The  scope  of  such  a  discussion  is  necessarily 
wide,  but  in  the  following  I  shall  confine  myself  to  cer- 
tain fundamentals,  rather  than  to  a  comparison  of  ex- 
amples. An  intelligent  study  of  mining  costs  must  be 
preceded  by  an  analysis  of  the  various  items  going  to 
make  up  the  total,  in  order  to  obtain  a  segregation  that 
shall  be  logical  and  useful.  Such  items  as  Mr.  Ingalls 
gives  in  his  brief  tabulation  are  certainly  useful,  but  they 
do  not  yield  the  whole,  or  even  the  larger  part,  of  the 
value  that  the  figures  in  themselves  contain.  This,  I  un- 
derstand, Mr.  Ingalls  recognizes,  and  I  have  no  doubt 
that  he  will  fully  indorse  the  statement  that  a  classifica- 
tion in  this  form  may  conceal  details  of  the  first  impor- 
tance to  the  engineer. 

In  the  first  place,  it  is  pertinent  to  inquire,  What  are 
the  uses  to  which  accounting  lends  itself?  There  is  the 
obvious  use  of  supplying  a  business  need ;  of  giving  to 
the  stockholders,  present  and  prospective,  a  reliable  idea 
of  what  the  property  can  do  in  the  way  of  profits;  and, 
in  general,  how  it  is  managed,  though  it  must  be  admitted 
that  comparisons  of  cost  in  this  way  may  be  misleading. 
In  fact,  they  are  chiefly  valuable  in  raising  inquiries  that 
only  a  more  logical  segregation  can  answer.  These  com- 
mercial accounts  will  naturally  fall  under  obvious  and 
simple  heads,  presenting  what  would  be,  from  the  engi- 
neer's point  of  view,  mere  summaries  of  the  more  ex- 
tended subdivisions  which  are  technically  useful ;  and  it  is 
the  logical  basis  for  these  technical  accounts  which  par- 
ticularly concerns  this  discussion. 

This  basis  may  be  simply  a  cutting  of  expenditure  into 
small  items,  as  is  the  case  in  Mr.  Ingalls'  table.  Fre- 
quently this  is  all  that  is  done,  and  the  valuable  infor- 


348  THE  ECONOMICS  OF  MINING 

mation  afforded  is  considered  the  end  of  the  business. 
But  there  is  more  to  be  gained  than  these  figures  directly 
give ;  and,  with  this  fact  in  view,  it  is  worth  considering 
what  it  is  for  which  the  engineer  really  has  use.  As 
manager,  he  wishes  to  compare  his  accounts,  month  by 
month  and  year  by  year,-  both  with  themselves  and  also 
with  those  of  other  mines,  as  a  check  upon  operation  and 
for  suggestion  of  improvement;  so  far  as  this  goes,  the 
items,  as  given  herewith,  answer  fairly.  But  he  wishes 
also  to  know  how  costs  will  be  altered  by  change  in  ton- 
nage. This  is  a  matter  of  importance,  for  the  mine  man- 
ager as  well  as  for  the  examining  engineer;  it  is  imper- 
:  fectly  given  by  such  a  system,  except  for  those  divisions 
•which  are  direct  functions  of  tonnage.  Some  accounts 
are  not  functions  of  tonnage  at  all,  such  as  superinten- 
dence, offices  and  taxes ;  others  are  not  proportional  func- 
tions, such  as  pumping,  hoisting;  there  is  a  long  list  of 
such  accounts. 

Then  both  the  manager  and  the  examining  engineer 
need  a  division;  this  should  recognize  accounts:  (A) 
that  are  independent  of,  and  (B)  those  that  are  dependent, 
on,  tonnage;  that  is,  (A)  where  the  totals  for  a  period 
do  not  alter  with  variation  in  tonnage,  and  (B)  where 
they  do  so  alter.  Further,  under  (A)  there  are  some 
(Ai)  accounts  that  are  practically  constant,  such  as 
superintendence  and  management,  and  others  (A2)  that, 
while  independent  of  tonnage,  are  variable,  such  as  those 
that  alter  with  change  of  season,  traveling  expense,  etc. 
In  close  estimates  it  will  help  to  have  these  known  sep- 
arately. (B)  also  has  two  natural  subdivisions:  (Bi) 
where  totals  are  virtually  direct  functions  of  tonnage, 
and  (62)  where  totals  are  indirect  functions  of  tonnage; 
that  is,  they  alter  with  tonnage,  but  not  proportionately. 
Examples  of  (Bi)  are  'stoping'  and  'tramming';  (B2) 
includes  development,  which  varies  according  to  condi- 
tions of  mine  and  orebodies;  also  certain  repairs. 


THE  COST  OF  MINING  349 

There  is  another  large  class  of  accounts,  namely,  those 
additions  to  plant,  equipment  and  repairs  that  will  make 
themselves  felt  over  extended  periods;  in  other  words, 
'capital  expenditures/  These  should  be  redeemed  by 
charges  against  operating  expenses  over  varying  periods. 
Whatever  may  be  the  business  policy  of  charging  these 
off,  there  can  be  small  question  that  the  accurate  logical 
treatment  for  the  engineer  is  to  consider  them  as  a  part 
of  his  operating  expense,  month  by  month.  No  estimate 
of  cost  which  roughly  assumes  that  such  expenditures 
will  equalize  themselves  will  be  fair;  if  they  are  not  put 
into  'working  cost'  there  is  always  the  danger  that  they 
will  be  overlooked  entirely  in  making  estimates.  A 
division  of  expenditure  on  these  lines  can  be  carried  out 
to  any  extent  of  itemization,  and  will  give  a  system  of 
technical  accounts  that  will  furnish  all  the  data  desired. 

In  studying  the  problem  of  a  proper  segregation,  it 
will  be  seen  that  none  of  the  advantages  of  the  more 
common  systems  of  plain  subdivision  will  be  lost;  the 
basis  is  applicable  to  the  smallest  as  well  as  to  the  largest 
mines;  the  degree  of  subdivision  can  be  extended,  as 
easily  as  in  any  other  system,  to  any  degree  of  minute- 
ness demanded. 

In  the  foregoing  I  have  aimed  to  outline  a  familiar 
principle ;  it  is  so  well  established  that  a  large  part  of  the 
recent  discussion  in  this  JOURNAL  on  'Mine  Equipment 
and  Ore  Reserves'  hinges  upon  it.  However,  though  the 
principle  is  not  new  in  practice,  so  far  as  I  know,  before 
the  discussion  referred  to,  it  had  not  been  brought  out  in 

Print  R.  GILMAN  BROWN. 

San  Francisco,  March  i,  1905. 


THE  COST  OF  MINING 

(April   6,    1905.) 

The  Editor: 

SIR — In  proposing  this  intricate  subject,  Mr.  Ingalls 
has  paved  the  way  for  an  almost  unlimited  interchange 
of  ideas  upon  an  important,  but  neglected,  branch  of  min- 
ing. As  Mr.  Finlay  has  so  well  put  it,  "The  problem  of 
deciding  upon  the  best  methods,  the  proper  scale  of  opera- 
tions and  the  most  desirable  working  cost  to  be  aimed  at, 
is  one  big  enough  for  the  best  business  intelligence  that  a 
mining  engineer  can  muster." 

The  subject  involves  a  phase  of  mining  concerning 
which  not  alone  the  newly  graduated  mining  engineer 
lacks  knowledge;  it  includes  problems  and  conditions 
which  many  engineers  of  long  experience  have  not  had 
the  good  fortune  to  encounter.  To  obtain  reliable  and 
well  segregated  figures  pertaining  to  working  costs  from 
the  average  mine,  this  is  one  of  the  most  difficult  tasks 
which  the  engineer  can  undertake;  unlike  the  other  fac- 
tors that  contribute  to  mine  valuation,  the  necessary  data 
can  be  obtained  only  from  written  records. 

I  cannot  understand  why  so  many  mining  companies 
continue  to  practice  such  wasteful  brevity.  It  is  a  fact 
that,  in  most  cases  where  such  method  is  practiced,  not 
only  the  officers  of  the  company,  but  their  servants  also, 
unconsciously  fail  in  possessing  and  preserving  an  ade- 
quate knowledge  of  their  true  conditions.  In  estimating 
the  value  of  a  mine  it  is  impossible  to  separate  this  fac- 
tor of  'working  cost' ;  nevertheless,  we  often  read  mining 
reports  in  which  the  author  may  have  accurately  applied 
every  known  principle  in  estimating  the  ore  reserves,  and 
yet,  for  want  of  proper  data,  he  may  decline  to  hazard  an 
estimate  of  the  working  costs.  The  working  cost  is  to 
mine  valuation,  what  width  is  to  the  assay-value  of  a 
given  vein. 


THE  COST  OF  MINING  351 

It  does  not  appear  to  be  a  difficult  task  to  standardize 
the  headings  to  be  used  in  the  final  classification  of  min- 
ing costs,  such  as  mining,  tramming,  hoisting,  sorting, 
crushing,  and  so  on,  following  the  different  processes 
used  in  the  treatment  of  the  ore ;  but  to  settle  upon  a  uni- 
form method  of  segregating  the  items  contributing  to 
these  accounts,  and  a  correct  distribution  of  the  moneys 
expended,  this  is  a  subject  which  should  elicit  informa- 
tion both  interesting  and  instructive.  For,  no  matter 
what  the  system  of  time-keeping  may  be  (within  economic 
limits),  there  are  certain  moneys  which  must  be  dis- 
tributed without  the  assistance  of  detailed  record. 

Working  costs  will  continue  to  show  variations,  in  the 
same  districts,  under  the  same  conditions  of  vein-width, 
capacity,  etc.,  because  engineers,  like  other  people,  differ 
in  their  views  of  application;  but,  nevertheless,  there  are 
certain  fundamental  principles  to  be  observed.  If  uni- 
formity is  regarded  in  mine  statements  (which  reflect  the 
local  conditions),  a  desire  to  effect  legitimate  economy 
will  be  created,  and  inferior  methods  will  soon  be  elimi- 
nated. As  a  concrete  example,  in  illustration  of  the 
methods  sometimes  applied  in  the  segregation  of  accounts, 
where  milling  and  cyanidation  only  are  employed,  the 
following  will  serve ;  the  final  summary  is  given  first,  in 
order  to  elucidate  some. points  more  clearly: 

Summary. 

Cost  Percent- 

Total  Cost.  Per  Ton.  age. 

Mining    $128,787.68  $3.38  45.54 

Transport  of  ore 3,857.18  o.io              1.36 

Sorting  and  crushing 8,625.31  0.22              3.00 

Milling    38,963.87  i. 02  12. oo 

Cyanidation 34,586.34  0.90              0.12 

Gold  realization 4,013.80  o.io              1.42 

General  charges 22,037.60  0.57              7.8 

Office  expenses 9,367.60  0.24             3.32 

Development    redemption 32,451.93  0.84  11.4 

(Depreciation?) 


Total    $282,691 .31  $7.42 


352  THE  ECONOMICS  OF  MINING 

In  order  to  make  the  above  summary  valuable,  and 
comparison  possible,  it  is  necessary  to  know  what  con- 
tributes to  the  several  accounts.  This  is  shown,  in  case 
of  'mining,'  for  example,  to  be  as  follows : 

Mining. 

Cost  Percent- 

Total  Cost.  Per  Ton.  age. 

Salaries  $4,462.88  $0.116  3.49 

Wages    (skilled) 12,018.84  0.315  9.34 

Contractors 10,132.88  0.266  7.89 

Wages   (unskilled) 26,751.86  0.700  20.78 

Food    10,889.82  0.280  8.49 

Stores    3,7i9.n  0.096  2.88 

Explosives   12,229.29  0.320  9.49 

Charcoal   41.46  o.ooi  0.03 

Fuel    (timber) 475-75  0.012  0.39 

Maintenance    2,590.76  0.066  2.00 

Workshops    817.74  0.021  0.63 

Transport  235.63  0.006  0.18 

Hospital    539-76  0.014  0.42 

Labor    premiums 220.67  0.006  0.19 

Pumping 10,867.76  0.288  8.44 

Compound  expenses 3,620.68  0.090  2.8 

Compressor  charges 633.08  0.016  0.49 

Manufacturing  and  sharpening 

hand   drills 8,489.17  0.220  6.59 

Hoisting   5,7O2.ii  0.148  4.42 

Underground   tramming 13,040.95  0.338  10.05 

Asaying    986.14  0.026  0.76 

Surveying  and  sampling 321.31  0.008  0.25 

Totals    $128,787.68          $3.38 

A  number  of  the  accounts  given  herewith,  such  as 
maintenance,  pumping,  underground  tramming,  manu- 
facturing and  sharpening  drills,  require  again  to  be  sub- 
divided, because  they  in  turn  contain  important  factors ; 
with  all  this  the  question  arises:  To  what  extent  does  it 
pay  to  segregate  mining  accounts?  The  remaining  items 
— stores,  wages,  salaries,  fuel,  etc. — carry  us  back  to  the 
timekeeper's  and  the  storeman's  records.  It  appears  to  me 
that  with  the  details  as  given  herewith,  when  accompanied 
by  a  correct  distribution  and  a  knowledge  of  the  local 
conditions,  the  engineer  should  be  fortified  with  material 
sufficient  to  direct  the  work  effectively  and  to  compile 
reliable  forecasts. 


THE  COST  OF  MINING  353 

Probably  one  of  the  most  troublesome  accounts  to  deal 
with,  especially  in  cases  where  the  shares  are  quoted  on 
the  market,  is  'development,'  to  which  is  charged  the 
money  expended  in  opening  up  the  ore-bearing  ground, 
before  and  after  the  reduction  of  ore  has  begun.  The 
common  interpretation  of  the  term  makes  it  include  all 
operations  (such  as  driving,  cross-cutting,  sinking — ex- 
clusive of  main  shafts — raising,  hauling,  sampling,  assay- 
ing, surveying  and  handling  the  barren  ground)  which 
result  in  the  opening  up  of  ore. 

Up  to  the  time  when  milling  begins,  we  will  assume 
that  $50,000  has  been  expended  upon  development  work, 
and  it  is  estimated  that  100,000  tons  of  ore  have  been 
developed,  hence  an  obligation  of  o.5c.  per  ton  has  been 
created ;  but  a  part  of  this  money  has  contributed  toward 
the  partial  exposure  of  other  tonnage,  which,  however, 
cannot  be  accurately  estimated.  In  order  to  arrive  at  the 
cost  per  ton  of  the  developed  ore,  the  measurements  taken 
underground  are  used,  while  the  monev  spent  is  redeemed 
upon  the  basis  of  the  tons  milled.  These  two  figures 
seldom,  if  ever,  agree ;  and,  while  the  sorted  product  will 
account  for  a  part  of  the  discrepancy,  there  are  always 
large  differences  between  the  tonnages  as  measured  un- 
derground and  the  combined  total  of  tons  milled  and 
sorted. 

In  addition  to  this  consideration,  there  are  monthly 
expenditures  on  account  of  development  work.  The 
cost  of  development  per  ton  over  any  period,  as  one 
month,  depends  upon  the  width  of  the  vein  encountered, 
the  relative  position  of  orebodies,  labor  conditions,  etc., 
during  that  period ;  thus,  if  development  costs  are  charged 
to  the  current-month  expense,  wild  fluctuation  will  occur 
in  the  working  costs.  Such  irregularities  create  a  feeling 
of  uncertainty,  which  might  be  followed  by  forced  sales 
of  the  shares  and  consequent  depreciation,  a  result  not 
tolerated  in  some  mining  centers. 


354  THE  ECONOMICS  OF  MINING 

Before  the  reduction  of  ore  has  begun,  the  cost  of  de- 
veloping a  certain  tonnage  is  far  greater  than  at  any 
other  period,  because  administration  and  other  constant 
charges  must  be  wholly  carried  by  this  account;  hence  it 
seems  only  fair  that  certain  adjustments  should  be  made 
in  redeeming  this  expenditure,  otherwise  the  present 
shareholders  become  unduly  taxed  for  the  benefit  of 
future  holders.  In  some  instances  the  expenditure,  on  ac- 
count of  development  up  to  the  time  milling  begins,  is 
charged  to  'capital  account/  and  written  off  in  the  same 
manner  as  machinery,  reservoirs,  or  other  permanent 
equipment ;  in  such  a  case  only  the  current-month  expense 
is  charged  to  working  costs. 

Another  method  of  discharging  this  obligation  is  by 
creating  a  'suspense  account,'  by  charging  the  develop- 
ment expenses  to  the  reduction  stage,  and  the  excess  de- 
velopment for  each  month  thereafter  to  this  account. 
Then  a  fixed  charge  is  made  monthly  for  development, 
and  the  'suspense'  account  is  written  off  in  annual  sums, 
which  are  measured  by  the  work  of  the  previous  year. 
This  method  seems  to  give  satisfactory  results. 

It  is  desirable  that  the  methods  of  distribution  be  re- 
flected in  a  statement  of  working  costs,  accompanied  by 
the  application  of  certain  definite  principles.  'Capital' 
account  is  generally  elastic  and  often  much  abused.  The 
items  usually  charged  to  this,  such  as  machinery  and 
plant,  buildings,  main  shafts,  etc.,  are  supposed  to  cover 
expenditures  on  permanent  work  and  equipment.  If  the 
conditions  are  such  that  the  life  of  the  enterprise  can  be 
calculated  accurately,  the  treatment  of  this  account  is 
simple,  and  the  capital  can  be  amortized  at  a  certain  com- 
puted rate  of  interest.  If  this  account  be  not  embodied  in 
a  statement  of  working  costs,  nor  referred  to  therein, 
effective  work  in  mine  equipment  is  not  reflected.  Hence, 
for  this  and  for  other  less  weighty  reasons,  it  would  seem 
important  that  a  certain  life  be  assumed,  or  other  meas- 


THE  COST  OF  MINING  355 

ures  taken  whereby  the  moneys  might,  be  redeemed  upon 
a  fixed  basis,  without  creating  an  unduly  heavy  charge. 

A  discussion  that  will  conduce  toward  standardization 
of  mining  costs,  as  well  as  toward  method  in  other  depart- 
ments, will  prove  of  invaluable  service,  both  to  the  engi- 
neer and  the  investor.  R  c  ROBERTS 

Berkeley,  Cal.,  March  7,  1905. 


COST  OF  CHLORINATING  CRIPPLE 
CREEK  ORES 

BY  PHILIP  ARGALL. 

(April  27,   1905.) 

The  special  report  on  the  operations  of  the  Portland 
mine  and  mill  during  the  year  1904,  recently  issued  by  the 
president  of  the  Portland  Gold  Mining  Company,  gives 
us,  for  the  first  time,  an  opportunity  of  analyzing  and  esti- 
mating the  total  cost  of  chlorinating  Cripple  Creek  ore 
in  a  modern  mill. 

During  the  year  under  review,  the  Portland  Gold  Min- 
ing Company  treated  in  its  Colorado  City  mill  88,997.44 
tons  of  ore,  averaging  $24.257  per  ton.  The  mill  was 
-credited  with  earning  a  treatment  charge  of  $623,253.03 
in  handling  this  ore,  which  amounts  to  $7.003  per  ton; 
the  profit  on  the  year's  operation  of  the  mill  is  said  to  be 
$153,833.73,  or  $1.7285  per  ton  treated;  by  deducting 
the  latter  amount  from  the  treatment  charge,  we  find  the 
•cost  of  milling  a  ton  of  ore,  including  metal  loss,  is 
$5.2745.  There  is  a  heading  'loss  by  extraction,'  and  that 
must  mean  metal  loss,  $105,951.41,  which  amounts  to 
$1.1965  per  ton  treated,  from  which  it  appears  that  the 
book  cost  of  chlorinating  a  ton  of  ore  during  the  past 
year  was  $4.084,  exclusive  of  amortization  and  interest 
on  the  capital  used  in  the  business.  The  method  of  keep- 
ing the  accounts  is  somewhat  peculiar,  and  evidently  de- 
signed to  compare  the  result  of  milling  the  Portland  ore 
in  the  Portland  mill,  against  selling  the  ore  to  the  cus- 
tom mills;  this,  at  least,  would  account  for  the  peculiar 
system  of  allowing  the  mill  $7  per  ton  for  treating  the 
ore,  and  I  shall  try  to  make  this  comparison. 

Turning  to  the  treasurer's  balance  sheet,  it  is  possible 
to  trace  out  pretty  closely  the  items  of  the  above  cost,  but 
I  make  it  very  nearly  IDC.  per  ton  more,  which  would  be 
almost  balanced  by  the  'treating  concentrates'  item,  or 


COST  OF  CHLORINATING  357 

there  may  be  some  credit  not  apparent  on  the  balance 
sheet  that  offsets  this  extra  10  cents. 

Total  Cost 

Expense.  Per  Ton. 

Bullion  expense $7,600.86  $0.0855 

Treating   concentrates 8,363.92  0.0938 

Operating  account 125,675.27  1.4121 

Chemicals    69,451.63  0.7804 

Assay   supplies <.      5,362.21  0.0602 

Store-room    account 43,675.18  0.4907 

Fuel   (roasting  and  drying  only) 38,835.48  0.4285 

Power   (electric) 26,395.92  0.2966 

General    expenses 12,150.95  0.1367 

Legal  expenses 10,763 .51  o .  1209 

Office  expenses 6,690.07  0.0752 

Office  furniture  (fixtures) 890.38  o.oioo 

Repairs    442.90  0.0050 

Treating  by-products 16,493.20  o.  1853 

88,997.44  tons  ©$4.1809  — $372,091.48  or  $4.1809 
In  addition  to  the  foregoing  amounts  there  is  a  charge 
of  $27,079.59  to  'equipment'  and  $33,560.76  to  'construc- 
tion.' 

As  the  mill  has  been  in  operation  several  years  it  is 
difficult  to  understand  the  further  charge  for  equipment, 
in  addition  to  a  heavy  construction  charge ;  in  the  matter 
of  repairs,  however,  the  palm  is  conceded  to  the  Portland 
mill,  unless  perchance  the  cost  of  repairs  is  hidden  in  the 
'storehouse'  and  operating  accounts. 

To  compare  intelligently  the  above  costs  with  the  rates 
charged  for  treating  ore  by  the  custom  chlorination  mills, 
we  must  include  amortization  and  the  capital  involved  in 
the  business.  It  is  well  known  that  the  custom  mills  pay 
for  the  ore  as  it  is  sampled,  and  carry  a  large  stock  of  ore 
on  hand,  usually  a  month's  run.  Therefore,  we  must 
charge  to  the  Portland  mill  the  interest  on  the  capital 
locked  up  in  ore,  bullion,  stores,  etc.,  and  I  shall  assume 
the  following: 

Ore,  3,000  tons $50,000 

Store   30,000 

Bullion  and  gold  in  solution,  etc 40,000 

Working  capital 30,000 

Total    $150,000 


358  THE  ECONOMICS  OF  MINING 

This  at  8%  will  equal  0.1350.  per  ton  of  ore  treated. 
Summarizing  these  figures  we  have  the  following : 

Cost  of  chlorinating   (book  cost) $4.084 

Interest  on  capital  invested  in  the  business o.  135 

Amortization,  say 0.781 

Metal  loss 1 . 190 

Total  $6. 190 

It  would  appear  that  the  gold  in  the  ore  is  billed  to  the 
Portland  mill  at  $20  per  oz.  (the  price  paid  by  the  custom 
mills),  less  $7  per  ton  treatment  charge,  so  we  are  now 
in  position  to  make  a  fair  comparison  between  the  Port- 
land mill  and  the  custom  mills  in  the  matter  of  total  cost 
of  chlorinating  Cripple  Creek  ore.  As  noted  in  this 
JOURNAL  for  December  29,  1904,  p.  1022,  the  rate  charged 
by  the  custom  mills  on  ore  varying  from  1.25  to  1.5  oz. 
of  gold  is  $7.75  per  ton,  less  $i  per  ton  on  long-time  con- 
tracts, so  on  the  latter  basis  ($6.75)  it  cannot  be  said 
that  the  charge  of  the  custom  chlbrination  mills  is  too 
high ;  they  have  a  large  amount  of  capital  invested  in 
their  plants  and  are  entitled  to  a  good  interest  on  the  in- 
vestment, considering  the  ephemeral  nature  of  the  busi- 
ness they  are  engaged  in. 

I  am  pleased  to  see  continued  improvements  in  the 
chlorination  process,  as  shown  in  the  following  extract 
from  the  report  of  the  superintendent  of  the  Portland 
mill :  "We  have  inaugurated  a  system  of  saving  the  values 
in  wash-water  from  the  barrels,  which  has  heretofore 
run  down  the  creek,  and  now  saves  the  company  thou- 
sands of  dollars  each  year." 


COST  OF  MINING  AND  MILLING 

BY  R.  J.  GRANT. 

(April   27,    1905.) 

The  detailed  expenditure  to  be  discussed  refers  to  oper- 
ations at  the  Cosmopolitan  mine,  situated  at  Kookynie, 
in  Western  Australia.  The  figures  are  those  for  Septem- 
ber, 1904.  It  should  be  added  that  the  Cosmopolitan  is 
about  500  miles  from  the  coast,  and  120  miles  northeast 
from  Kalgoorlie,  on  the  government  railway. 

It  is  one  of  the  many  companies  in  Western  Australia 
under  the  management  of  Messrs.  Bewick,  Moreing  & 
Company.  It  was  taken  over  by  them  in  the  latter  part 
of  1902,  with  H.  A.  Shipman  as  mine  manager.  At  that 
time  the  costs  were  about  $6.75  per  ton  for  mining  and 
milling.  When  Mr.  Shipman  left,  in  May,  1904,  the 
costs  had  been  reduced  to  $2.95.  The  writer  succeeded 
Mr.  Shipman.  George  Gill  is  underground  superinten- 
dent, and  Alfred  Bloomfield  is  mill  superintendent. 

The  conditions  are  not  all  that  might  be  desired  for  low 
costs ;  the  labor  question  is  a  serious  one,  and  wages  are 
high  for  the  class  of  workmen  employed.  The  average 
wage  per  eight-hour  shift  is  about  $3.20 ;  this  includes 
all  classes,  from  $2.85  per  shift  paid  to  truckers  and  shov- 
elers,  which  is  the  lowest  rate,  to  $4  per  shift  for  machine 
men 'working  in  wet  ground,  being  the  highest  rate.  Both 
machine  men  get  the  same  rate ;  in  other  words,  no  helper 
is  recognized. 

Supplies  are  all  high,  explosives  costing  50%  more  than 
in  America,  and  other  goods  in  proportion.  Wood  is  used 
for  fuel,  and  costs  about  $5.60  per  cord,  two  cords  being 
equal  to  one  ton  of  average  coal.  Mine  water,  which  is 
salt  and  contains  i%  solid  matter,  is  used  for  steam- 


360  THE  ECONOMICS  OF  MINING 

ing  and  is  a  constant  expense.  The  cost  of  cleaning 
boilers  alone  is  over  $300  per  month. 

The  ore,  or  'stone/  as  it  is  called,  is  a  glassy  white 
quartz,  carrying  a  small  amount  of  iron  pyrite,  and,  at 
present,  about  7  dwt.  gold  per  ton.  The  'reef  lies  at  an 
angle  of  41°  between  hard  granite  walls,  and  averages 
8  ft.  in  width,  occasionally  carrying  from  I  to  4  ft.  of 
waste  in  the  center.  All  ore  in  the  stopes  has  to  be  shov- 
eled, owing  to  the  flatness  of  the  foot- wall.  For  the 
month  under  report,  the  ore  came  from  the  700,  800  and 
900-ft.  levels — but  chiefly  from  the  goo-ft.  level.  The 
ore  is  trucked  from  the  stopes  to  bins  at  the  shaft,  and 
hoisted  from  there  in  skips,  holding  about  2j  tons  each, 
to  the  surface,  where  it  is  dumped  into  bins.  It  is  run  by 
gravity  over  grizzlies  into  Blake  crushers  set  to  i|  in. 
It  is  then  hoisted  50  ft.  and  trucked  to  the  mill  bins.  The 
mill  contains  50  stamps,  each  weighing,  when  newly  shod, 
1,090  Ib.  .The  drop  is  8  in.,  and  the  speed  averages  106 
drops  per  minute.  The  screens  used  are  2O-mesh  wire- 
cloth,  and  the  height  of  discharge  is  from  \  to  2^  in.  The 
pulp  goes  from  the  stamps  over  copper  plates,  12  ft.  long, 
then  over  10  Wilfley  tables  to  a  tailing  wheel,  where  it  is 
elevated  50  ft.  and  run  into  leaching  vats,  which  are  fitted 
with  distributors;  here  the  sand  settles,  and  is  treated 
with  cyanide.  The  sand  residue  is  carried,  by  trucking 
and  hoisting,  to  a  dump  60  ft.  high.  The  slime  runs  back 
to  spitzkasten,  where  it  is  settled ;  then  it  passes  into  agi- 
tation vats  and  is  treated  with  a  0.07%  cyanide 
solution,  and  filter-pressed;  the  overflow  water  is  run 
back  to  the  battery  and  used  again.  The  residue  is 
trucked  to  a  mixer,  where  water  is  added,  and  afterward 
pumped  to  a  dam. 

The  mining  and  milling  costs  include  everything  ex- 
cept the  London  office  expenditure,  and  cover  taxes,  in- 
surance, general  manager's  salary,  etc.  All  development 
work  in  the  mine  is  done  on  contract  at  the  following 


MINING  AND  MILLING  COSTS  361 

average  prices:  Drifts,  $10;  cross-cuts,  $12.50;  raises, 
$8.20  per  ft.  The  contractor  provides  all  explosives  and 
candles,  and  delivers  the  ore  into  the  bins  at  the  main 
shaft,  the  company  furnishing  drills,  tools  and  power. 

Precipitation  takes  place  in  ordinary  zinc  boxes ;  the 
clean-up  is  effected  by  the  acid  method.  The  roasting 
and  smelting  are  done  in  the  usual  manner. 

The  gold  is  extracted  as  follows : 

Amalgamation    (boxes  and  plates) 61 . 55% 

Concentrate   by   cyanidation 8 . 50  " 

Sand  by  cyanidation 14.50  " 

Slime  by  cyanidation  and  filter-pressing 6.00 '' 


Average  value  of  'heads'  for  month 6  dwt.  18  gr. 

Average  value  of  'residues'  for  month o     *'      15 


Total   extraction 90. 55  " 

:rage  value  of  'heads'  for  month 

;rage  value  of  'residues'  for  month 

The  cost  of  mining  was  as  follows : 

Per  Ton  Mined. 

Labor  and  salaries $0.48 

Explosives   o .  1050 

Candles    0.0125 

Steel 0.0705 

Sundry    supplies 0.0610 

Power  for  machine  drills o.  1300 

Assaying  and  sampling 0.0165 

Repairs  and  maintenance 0.0430 

General   expenses 0.0575 

Proportion   pumping o.  1225 

Trucking  and  hoisting  ore 0.2350 

Timbering  and  filling  stopes o.  1300 

9,193  tons $1-3555 

The  cost  of  milling  is  given  in  the  table  below : 

Per  Ton  Milled. 

Rock-breaking   $o. 0382 

Ore  transport,  from  crushers  to  mill-bins 0.0618 

Battery   and    plates 0.4062 

Concentrating 0.0340 

Cyaniding    concentrate o .  0236 

Cyaniding  sand  by  percolation 0.2254 

Cyaniding  slime  by  agitation o .  0886 

Filter-pressing  slime 0.0776 

Precipitation  and  smelting 0.0698 

Disposal  of  residue o.  1778 

9,193  tons $i  .2030 


362  THE  ECONOMICS  OF  MINING 

The  working  cost  per  actual  ton  treated  was  as  follows : 
Milling   (9,193  tons). 

Per  Ton  Milled. 

Labor  and  salaries < $0.0906 

Power o.  1750 

Repairs   and   maintenance 0.0544 

Assaying  and  sampling 0.0072 

General   expenses 0.0108 

Quicksilver   0.0070 

Shoes  and  dies 0.0358 

Sundry   supplies 0.0254 

Total   cost $0.4062 

Concentrating  (157  tons  saved). 

Per  Ton  Treated. 

Labor   and  salaries $i .  2194 

Power 0.4266 

Repairs  and  maintenance o.  1318 

General  expenses o.  1466 

Sundry    supplies o. 0654 

Total  cost $i  .9898 

Cyaniding  Concentrate  (162  tons  treated). 

Per  Ton  Treated. 

Labor   and  salaries $0.4286 

Power 0.0566 

Assaying . . , 0.0324 

General  expenses    0.0496 

Potassium  cyanide o .  7692 

Total  $i  .3364 

Cyaniding  Sand  by  Percolation  (6,768  tons). 

Per  Ton  Treated. 

Labor   and   salaries. $0.0498 

Power    0.0724 

Repairs  and  maintenance 0.0428 

Assaying    o .  0064 

General  expenses 0.0060 

Potassium  cyanide  0.0936 

Sundry    supplies 0.0024 

Total  cost $0.2734 

Cyaniding  Slime  by  Agitation  (1,456  tons). 

Per  Ton  Treated. 

Labor  and  salaries $0.0906 

Power   o .  0308 

Repairs  and  maintenance 0.0530 

Assaying    0.0218 

General  expenses 0.0106 

Potassium  cyanide o .  3294 

Sundry    supplies 0.0222 

Total  cost $0.5584 


MINING  AND  MILLING  COSTS  363 

Filter-pressing  Slime   (1,456  tons). 

Per  Ton  Treated. 

Labor  and   salaries $0.3488 

Power 0.0206 

Repairs   and   maintenance 0.0362 

General   expenses 0.0418 

Filter-cloth    0.0336 

Sundry    supplies v 0.0092 


Total  cost $0.4902 

Precipitation  and  Smelting  (9,193  tons}. 

Per  Ton  Treated. 

Labor   and   salaries $0.0204 

Repairs  and  maintenance 0.0022 

Assaying 0.0050 

General   expenses 0.0024 

Fuel    0.0046 

Zinc   shavings 0.0138 

Sulphuric  acid 0.0126 

Sundry  supples 0.0088 


Total  cost $0.0698 


HOIST  BY  HIS  OWN   PETARD 

(Editorial,  April   27,    1905.) 

A  spasm  of  exactitude  has  swept  across  the  mining 
world;  'ore-reserves'  has  become  a  term  of  dreaded  im- 
port ;  the  young  men  have  armed  themselves  with  a  boom- 
erang and  the  old  hands  have  been  astonished  into  silence. 
The  campaign  for  method  in  sampling,  for  conscience  in 
estimating,  and  for  science  in  final  appraisal  of  mines  has 
succeeded  beyond  our  expectation.  Transmission  of 
ideas  has  been  helped  by  the  technical  literature  of  the 
profession,  and  now,  like  the  undertow  that  meets  the 
oncoming  surf,  we  are  receiving  the  backward  wave  of 
a  discussion  that  has  spent  its  force  for  good.  We  are 
threatened  with  virtues  that  have  been  exaggerated  to 
vices,  and  with  methods  that  have  been  debased  to  a 
fetich.  The  whole  question  of  ore-reserves  has  become 
a  state  of  mind ;  there  is  a  palsy  on  judgment,  an  eclipse 
of  experience. 

The  mining  engineer,  who  once  used  his  brains  with 
cheerful  confidence  to  formulate  clear  opinions  regarding 
the  condition  of  a  mine,  now  stands  panic-stricken  on  the 
edge  of  a  difficulty  from  which  he  cannot  retreat.  From 
emphasizing  the  care  required  in  determining  the  com- 
mercial value  of  ore,  from  the  demand  that  the  old  happy- 
go-lucky  style  of  inspection  shall  no  longer  be  tolerated, 
from  these  and  other  efforts  to  ally  science  with  experi- 
ence, we  have  passed  to  that  stage  where  engineers  state 
tonnages  with  fearsome  minuteness  and  quibble  over  as- 
says of  academic  difference,  until  the  last  stroke  of  all 
is  the  suggestion,  in  South  Africa,  to  "audit  ore  reserves" 
and  appoint  a  government-certificated-ore-reserve-audi- 
tor!  In  truth,  it  is  time  to  pull  up.  West  Australian 
mining  has  been  suffering  from  this  intoxication  of 
theory  until  it  is  recognized  that  each  estimate  of  the  ore 
blocked  out  in  a  mine  must  be  more  conservative  than  the 


HOIST  BY  HIS  OWN  PETARD  365 

last.  A  variation  which  is  no  real  difference  becomes 
a  discrepancy;  a  capable  engineer's  work  is  stultified  by 
that  of  another  equally  capable,  simply  because  the  two  of 
them  do  not  sing  a  perfect  duet  of  appraisal,  and  share- 
holders tremble  every  time  a  cablegram  comes  from  the 
mine  manager.  It  has  gone  so  far  that  the  general  condi- 
tion of  a  mine,  the  metallurgical  treatment  of  the  ore,  the 
excellence  of  management,  are  of  no  avail  when  weighed 
against  the  estimate  of  the  ore  in  reserve;  indeed,  one 
could  maintain  the  shares  of  a  mining  company  at  a  big 
premium  without  producing  an  ounce  of  gold  or  paying 
a  penny  of  dividend,  if  only  at  stated  intervals  some  engi- 
neer would  certify  that  the  ore-reserves  had  increased.  In 
South  Africa  the  sampler  looms  almost  bigger  than  the 
consulting  engineer,  and  in  America  the  English-owned 
mines  which  are  suffering  from  the  same  miasma  are  de- 
scribed by  their  engineers  in  terms  which  are  so  cautious 
that,  whether  twice  as  much  or  half  the  amount  of  ore 
stated  should  be  extracted,  no  censure  would  be  possible. 
In  the  old  days  they  guessed  twice  and  divided  by  two  for 
accuracy's  sake ;  nowadays  the  engineer,  more  solicitous 
for  his  own  reputation  than  his  client's  welfare,  hedges 
with  providence  and  divides  by  two,  so  as  to  be  safe.  Min- 
ing is  being  made  ridiculous ;  there  is  an  idea  that  risk  can 
be  eliminated,  that  shareholders  can  insist  on  supernatural 
closeness  of  calculation,  that  engineers  must  save  their 
skins  and  that  everyone  must  "get  out  from  under"  when 
an  orebody  happens  to  misbehave. 

And  in  all  this,  have  we  not  lost  the  main  point  of 
mining — what  the  old  Cornish  captains  would  call  the 
'sport'  of  it — the  exercise  of  experienced  judgment  in 
sizing  up  the  present  character  and  future  prospects  of 
a  mine?  It  appears  so.  We  no  longer  buy  a  mine  for 
the  chance  of  favorable  development,  the  making  of  a 
mine  out  of  a  prospect,  or  a  bonanza  out  of  a  struggling 
hole-in-the-ground  ;  we  take  no  risks ;  we  buy  ore, — as  if 


366  THE  ECONOMICS  OF  MINING 

by  all  the  measuring  and  assaying  and  arithmetic  we  can 
eliminate  the  essential  risk  of  estimating  what  we  do  not 
see,  save  at  its  edges.  Sample  and  survey  and  calculate 
all  you  please,  and  then,  even  if  you  face  the  facts  like  a 
man  and  do  not  play  tricks  to  avoid  responsibility,  you 
still  have  only  one-half — sometimes  not  even  one-half — 
of  the  essential  problem.  The  future  prospects  of  a  mine 
remain  beyond  the  vision  of  a  timid  doctrinaire;  to  gauge 
them  fairly  needs  the  ability  to  observe  beyond  the  point 
of  the  pick,  and  the  honesty  to  weigh  facts,  to  an  extent 
far  beyond  the  shifting  compromise  of  a  conservative 
ore-reserver.  It  is  time  to  get  back  to  bedrock. 


DREDGING  AT  OROVILLE* 

BY  L.  J.  HOHL. 

(May  ii,   1905.) 

The  average  running  time  of  the  boats  varies  a  great 
deal  in  different  months  and  under  different  circum- 
stances. A  new  boat  will  be  able  to  make  better  running 
time,  as  no  serious  breaks  are  likely  to  occur  if  it  has  been 
made  strong  enough  in  the  first  place.  A  breakdown  of 
any  magnitude,  such  as  upper  tumbler  shaft,  lower  tum- 
bler shaft  or  bucket  line,  will  cut  down  the  average  run- 
ning time.  Where  the  boats  are  influenced  by  the  stage 
of  the  water  in  the  river,  high  water  may  seriously  ham- 
per them  at  certain  seasons,  and  last  winter  was  an  ex- 
ceptionally severe  one  in  this  respect,  high  water  occur- 
ring as  early  as  November,  1903,  and  being  with  us  all 
through  February  and  March  of  1904.  To  show  an 
extreme  case  I  have  taken  a  selected  year  in  the  run  of  a 
boat  exposed  to  the  high  water,  so  that  the  year  contains 
all  the  high  water  of  last  season. 

Beside  high  water  troubles,  the  bucket  line  was  in  bad 
shape  and  broke  frequently,  the  upper  tumbler  shaft  broke 
twice  during  the  period  under  consideration,  the  lower 
tumbler  and  its  shaft  had  to  be  renewed,  also  the  con- 
veyor-belt, and,  to  cap  the  climax,  the  power  was  abnor- 
mally unsteady  and  unreliable  during  most  of  that  year. 
The  running  time  of  the  boat,  figuring  on  the  basis  of 
365  days  in  the  year  and  24  hours  to  the  day,  was  16 
hours  out  of  24.  It  may  seem  odd  to  call  particular  at- 
tention to  the  fact  that  in  this  calculation  the  year  is  taken 
as  having  365  days  and  each  day  to  have  24  hours,  but 
when  you  look  over  the  records  of  some  of  the  boats  you 
will  find  that  some  of  the  stoppages  (such  as  high  water, 
holidays,  etc.)  are  not  counted  on,  the  owner  or  manager 

*  Abstract  from  paper  read  before  the  Thirteenth  Annual  Con- 
vention of  the  California  Miners'  Association,  December,  1904. 


368  THE  ECONOMICS  OF  MINING 

arguing  that  the  dredge  should  not  be  charged  with  any 
delays  not  originating  in  the  dredge  or  its  appurtenances. 
The  simple  truth  that  the  dredge  is  not  earning  anything 
when  it  is  stopped,  whether  such  stoppage  originates 
within  or  without  the  dredge,  and  which  fact  finds  ex- 
pression on  the  balance  sheet  of  the  company  at  the  end 
of  the  year,  is  sufficient  to  show  the  fallacy  of  the 
assumption.  Returning  to  the  case  under  consideration,  I 
append  a  tabulated  statement: 

Causes  of  Stoppages,  in  Per  Cents. 

Belting  1.3 

Bucket  line 23 .  i 

Lines  breaking  and  changing 4.8 

Cleaning  up 1.7 

Conveyor  5.3 

Elevating  machinery 1.5 

Frictions  and   winches 2.5 

General  repairs 1.7 

High  water 15.6 

Holidays    1.8 

Ladder  and  ladder  hoist 1.3 

Lower  tumbler  8.3 

Oiling  3.8 

Power  off 4.5 

Shaking  screen 4.5 

Stones,  roots  and  stumps 0.7 

Upper  tumbler 16.2 

Water  pump 1.4 

Total  loo. o 

Another  set  of  figures  follows,  covering  the  operations 
of  dredges  over  a  period  of  three  years,  and  it  is  but  fair 
to  state  that  the  high  percentage  shown  under  the  head 
of  power  troubles  is  not  attributable  to  the  present  com- 
pany operating  in  the  field,  but  to  an  older  electric-power 
plant : 

Causes   of  Stoppages,   in  Per   Cents. 

Moving  ahead 5.7 

Power  troubles 15.6 

Repairs  and  holidays 75.4 

Sand  pump 3.3 

Total  .  .100.0 


DREDGING  AT  OROVILLE  369 

The  average  running  time  for  the  period  given  was  16 
hours,  56  minutes.  From  other  records  extending  over 
long  periods  of  time  it  is  probable  that  the  best  average 
running  time  of  the  boats  will  hardly  exceed  18  hours 
out  of  24,  taking  all  causes  of  stoppages  into  consideration 
and  figuring  on  365  days  per  year.  It  is  true  that  in  a 
few  cases  better  running  time  has  been  obtained,  but 
where  this  has  been  the  fact,  it  was  due  to  conditions  sur- 
rounding that  case,  which  it  is  not  safe  to  figure  on  in 
every  instance. 

While  the  figures  so  far  presented  were  for  Bucyrus 
boats,  I  have  condensed  from  Mr.  Monroe's  paper  in 
the  Mining  and  Scientific  Press  of  February  6,  1904,  cor- 
responding data  for  a  5-01.  ft.  Risdon  boat,  which  I  give 
below : 

Causes   of  Stoppages,   in  Per   Cents. 

Bucket  line  and  ladder 30.7 

Cleanups 7.7 

General  repairs 17.9 

Lines 9.9 

Power  troubles 7.9 

Pumps    5.4 

Screens    4.5 

Stacker   9.4 

Total  loo.o 

The  data  above  extended  over  a  period  of  one  year,  but 
not  a  picked  one,  it  being  a  regular  calendar  year.  The 
bucket  line  on  the  boat  was  renewed  during  the  year, 
which  raises  the  percentage  of  time  lost  on  account 
of  the  bucket  line  and  ladder.  Comparing  the  percentage 
of  time  lost  on  account  of  shaking  screens  and  stacker 
with  the  percentage  given  for  the  picked  year  of  the 
Bucyrus  boat,  we  find,  curiously  enough,  that  the  loss 
due  to  the  shaking  device  in  either  case  was  exactly  the 
same,  while  the  Risdon  stacker  shows  9.4%  as  against 
5.3%  for  the  belt-conveyor.  The  running  time  of 
the  Risdon  dredge  for  the  year  amounts  to  16  hours,  39 
minutes  out  of  24  hours.  The  cost  of  repairs  to  the  con- 


370  THE  ECONOMICS  OF  MINING 

veyor  during  the  year  for  the  Risdon  boat  amounted  to 
$1,241.28,  an  amount  which  about  equals  the  cost  of  the 
belt-conveyor  in  this  particular  instance,  if  the  difference 
in  lost  time  is  taken  into  consideration. 

As  to  the  capacity  of  the  different  types  and  styles  of 
boats,  no  fixed  rule  can  be  laid  down,  for  the  reason  that 
the  same  dredge  in  different  ground  may  not  be  able  to 
make  as  much  of  a  yardage,  owing  to  local  conditions. 
To  mention  one  of  these  conditions,  I  would  say  that  the 
washing  of  very  sandy  soil  is  more  difficult  than  that  of 
pure  gravel,  and  it  may  be  necessary  to  cut  down  the 
digging,  for  the  reason  that  with  full  buckets  the  riffles 
become  crowded. 

A  fair  average  yardage  would  be  about  as  follows : 

Bucket  Capacity.  Yd.  Per  Month. 

Risdon   dredge 3  cu.  ft.  25,000  to  35,000 

Risdon   dredge 5  cu.  ft.  35,ooo  to  45,000 

Bucyrus  dredge 3  cu.  ft.  35,ooo  to  45,000 

Bucyrus  dredge 5  cu.  ft.  50,000  to  65,000 

The  above  figures  would  represent  the  work  of  a 
dredge,  as  now  in  use  in  the  Oroville  district,  extending 
over  a  long  period  of  time.  The  maximum  obtainable 
will  far  exceed  the  figures  quoted,  and  may  be  kept  up 
for  a  short  period  with  any  one  of  the  boats. 

The  cost  of  production  depends  to  a  great  extent  on 
the  magnitude  of  the  enterprise,  which  reduces  the  gen- 
eral expenses  by  dividing  them  up  among  a  number  of 
different  boats,  and  by  the  chance  of  diminishing  the 
cost  of  repair  by  the  erection  of  shops  hear  by.  It  has  to 
be  kept  in  mind  that  the  operating  expenses  are  influenced 
by  local  conditions,  such  as  nature  of  the  ground,  general 
efficiency  of  digging  and  washing  appliances,  adjustment 
of  motors  and  resistances  to  their  work,  extraordinary 
repairs  occurring  in  short  periods  of  time  and  a  number 
of  other  details. 

The  following  statement  will  give  a  fair  representation 
of  the  extremes  of  the  cost  per  cubic  yard  of  material : 


DREDGING  AT  OROVILLE  371 

Operating  Expenses  Per  Cubic  Yard  of  Material 

Power   i. 06  i. 20  1.15  1.61  1.77 

Repairs    2.86  3.03  3.46  2.97  3.80 

Labor    1.64  1.82  1.85  2.33  2.05 

General   expenses.  0.64  0.67  1.23  1.28  0.73 

Totals   6.20  6.72  7.69  8.19  8.35 

The  data  for  the  above  statement  were  obtained  from 
different  operators  in  the  district;  the  period  over  which 
they  extend  is  in  each  case  not  less  than  one  year.  In 
some  of  the  figures  given  the  taxes  are  included  under  the 
heading  of  general  expenses,  in  others  they  are  not.  The 
cost  of  superintendence  in  some  instances  is  included 
under  the  item  of  dredge  labor,  in  others  it  is  charged  to 
general  expense,  but  in  all  cases  the  totals  give  all  the  ex- 
penses incident  to  the  working  of  the  dredge  and  keeping 
it  in  good  running  order. 

The  life  of  a  boat  has  not  been  determined  as  yet,  but 
with  a  well  and  strongly  constructed  hull,  which  is  taken 
good  care  of,  it  should  be  not  less  than  12  to  15  years  in 
this  climate.  It  is  self-evident  that  during  that  period  a 
great  portion  of  the  machinery  and  appliances  will  have 
to  be  renewed  over  and  over  again,  such  as  tumblers,  lad- 
der rollers,  buckets,  shaking  screens,  pulleys  and  shafts, 
spuds,  conveyors,  etc. ;  but  the  item  of  dredge  repairs,  as 
shown  in  the  above  statements  of  cost  of  operating,  will 
cover  these  items,  and  there  is  no  doubt  that  the  experi- 
ence gained  so  far,  and  which  will  be  gained  in  the  future, 
will  have  a  tendency  to  gradually  diminish  such  expenses, 
and,  what  is  even  more  important,  forestall  the  occurrence 
of  larger  mishaps. 


THE  COST  OF  MINING 

(May    n,    1905.) 

The  Editor: 

SIR — Mr.  Ingalls'  very  pertinent  article,  'Cost  of  Min- 
ing in  America,'  brings  up  a  subject  meriting  the  broadest 
discussion.  There  are  few  of  us  who  have  managed  min- 
ing properties  who  cannot  add  something  to  the  general 
fund  of  knowledge  in  this  department.  My  own  custom 
has  been  always  to  keep  a  monthly  record,  and  at  the  end 
of  the  year  to  make  a  full  general  report  in  the  form  of  a 
statement  of  cost  and  production.  I  happen  to  have  re- 
tained a  copy  of  one  of  these  reports  made  several  years 
ago,  and  no  harm  can  be  done  now  by  making  it  public. 

The  results  may  not  be  'standard,'  but  when  it  is  taken 
into  account  that  we  were  60  miles  from  even  a  wagon 
road,  and  that  the  lode  was  only  from  2j  to  3  1-3  ft.  wide, 
and  the  orebodies  small  and  scattered  over  three-fourths 
of  a  mile  on  the  strike,  it  will  be  seen  that  worse  might 
have  been  done.  Of  course,  in  a  report  of  this  nature, 
only  the  general  headings  are  required,  and  these  sift 
down  to : 

Cost  per  ton : 

Prospecting  and  dead  work. 

Ore  extraction. 

Ore  reduction. 

General  expenses  and  sundries. 

To  determine  these  a  more  or  less  detailed  series  of 
accounts  must  be  kept.  In  my  own  work,  I  have  con- 
sidered only  a  few  general  subdivisions  as  necessary ; 
although  strict  account  is  kept  of  everything  in  detail. 
For  instance :  In  my  'statement  of  costs,'  etc.,  ore  extrac- 
tion is  what  is  usually  classed  as  'mining,'  and  this  I 


THE  COST  OF  MINING  373 

consider  as  made  up,  for  the  purpose  of  this  report,  about 
as  follows: 
Mining : 
Assay  department: 

Labor. 

Materials. 

Sundries. 
Ore  breaking: 

Labor        ) 

Materials  j 
Including  same  for  timbering,  etc. 

Sundries. 
Administration : 

Salaries. 

General  expenses. 

Office  expenses. 

Under  the  head  of  'materials'  is  bunched  everything 
used  in  that  line  during  each  month.  'Sundries'  embraces 
minor  expenses  not  coming  under  any  one  of  the  general 
headings  adopted — item  n  of  Mr.  Ingalls'  list.  'General 
expenses'  embraces  the  fixed  expenditures  in  carrying  on 
the  work,  such  as  items  4,  5,  9  and  10  of  Mr.  Ingalls'  list. 
In  this  way  one  gets  a  full  and  accurate  idea  of  the 
work  carried  on  during  a  year,  without  the  need  of  tabu- 
lating all  expenses  in  minute  detail;  for  subdivision  can 
be  carried  out  to  the  point  of  stultifying  the  object  in 
view.  Although  some  improvements  can  undoubtedly 
be  suggested,  still  I  believe  that  such  a  compilation  as  I 
here  present  about  covers  the  ground,  and  gives  a  much 
more  full  information  than  could  fifty  pages  of .  written 
report. 

All  repairing,  of  whatever  nature,  in  the  mine,  all  drift- 
ing, sinking,  raising  and  timbering  of  such  works,  run- 
ning out  waste,  etc.,  I  always  class  as  'prospecting  and 
dead  work,'  and  only  consider  the  ore  as  mined  when  it 
is  delivered  to  the  bins  or  on  the  dump.  All  sorting  and 


374 


THE  ECONOMICS  OF  MINING 


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376  THE  ECONOMICS  OF  MINING 

preliminary  work  necessary  to  secure  workable  ore  should 
be  charged  to  'ore  extraction/  In  the  case  we  now  have 
under  consideration,  it  will  be  noted  that  about  33  per 
cent  of  the  cost  per  ton  was  due  to  prospecting  and  dead 
work.  This  was  due  to  the  urgent  need,  at  all  times,  for 
ore;  there  being  practically  no  reserves,  and  no  regular, 
continuous  orebody.  Under  the  head  of  'general  ex- 
penses/ I  always  include  improvements  of  all  kinds,  and 
have  always  charged  these  to  the  working  expenses  of  the 
month  in  which  they  were  made. 

I  venture  to  say  that  there  are  few  cases  where  tn<: 
costs  in  one  mining  district  can  be  taken  for  granted  as 
fitting  some  other  camp ;  and  where  grave  mistakes  are 
sometimes  made  is  in  assuming  this,  when,  as  a  fact,  ma- 
terials of  all  kinds  may  cost  from  two  to  three  times  as 
much  in  a  new  region  as  in  some  favored  region  which 
the  engineer  making  the  'finding'  may  have  in  mind.  In 
figuring  on  probable  costs  the  greatest  care  should  always 
be  used,  and  the  fact  borne  in  mind  that  mining  and  mill- 
ing costs  that  can  be  closely  approximated  do  not  consti- 
tute the  sole  expense  of  exploiting  a  new  orebody;  but 
prospecting,  dead  work  and  general  expenses  have  to  be 
taken  into  account,  for  they  often  amount  to  as  much  as 
do  mining  and  milling.  Especially  is  this  the  case  with 
small,  irregular  lodes  and  orebodies  of  irregular  shape. 

I  hope  that  this  letter  may,  at  least,  cause  some  one  to 
take  issue  with  me,  thus  enlarging  the  discussion  on  such 
a  vital  subject ;  or  if  not  worthy  of  such  attention,  that  it 
will  bring  out  the  latent  knowledge  of  some  well  informed 
co-workers  who,  because  it  all  seems  so  simple  to  them, 
refrain  from  giving  valuable  experience  to  the  profession 

at  lar£e'  E.  A.  H.  TAYS. 

Fuerte,  Sinaloa,  Mexico,  February  16,  1905. 


THE  COST  OF  MINING  377 
SUMMARY.* 

Total  production  for  year $280,797.37 

Total    expenses   for   year 186,243.14 


Difference $94,554.23 

What  concentrate     would  produce  net  by  shipping    71 1.95 

$95,266.18 
Less  gold   purchased   during   year 1,172.19 

Net  profit   for  year,   assay  production     $94,093.19 

Net  profit  for  year,  actual  returns  from   bank    $93,757-65 


*  See  table,  pp.  374*5» 


SOME   PUMPING  DATA 

BY  R.  OILMAN  BROWN. 

(May  18,    1905.) 

The  following  figures  have  been  collected  from  records 
kept  at  the  Brunswick  mine,  Grass  Valley,  Cal.,  during 
the  fall  and  winter  of  1903-4.  In  the  previous  year 
an  extraordinary  flow  of  water  was  cut  on  the  1,250- ft. 
level  (1,017  ft.  vertical  depth),  which  quickly  drowned 
the  Cornish  pumps  by  which  the  mine  had  been  pre- 
viously drained.  The  water  raised  to  the  7OO-ft.  level 
(505  ft.,  vertically,  below  the  collar  of  the  shaft  and  376 
ft.  below  the  drainage  adit),  and  was  there  held  by  the 
i2-in.  plunger  of  the  Cornish  system. 

The  problem  of  unwatering  presented  some  complica- 
tions, chief  among  which  was  the  small  size  of  the  shaft 
compartments,  which,  in  the  upper  and  older  part,  were 
32  by  39  in.  clear.  This  precluded  the  use  of  large  sink- 
ing-pumps and  finally  led  to  the  selection  of  the  air-lift 
for  the  actual  unwatering,  lack  of  efficiency  being  of  but 
small  moment  when  compared  with  the  advantages  of- 
fered in  compactness,  simplicity  and  small  first  cost.  The 
use  of  the  air-lift  for  the  work  was  first  suggested  by  E. 
A.  Rix,  of  San  Francisco. 

The  general  scheme  for  freeing  the  mine  of  water  and 
installing  a  permanent  system  was  worked  out  as  follows : 
Starting  from  the  rate  at  which  the  flooding  water  had 
risen  in  the  shaft,  it  was  determined  that  the  permanent 
system  should  have  a  maximum  capacity  of  500  gal.  per 
min. ;  a  pump  of  that  capacity  was  to  be  installed  at  the 
7oo-ft.  level  and  the  water  lowered  from  that  horizon 
with  an  air-lift  to  the  9OO-ft.  level.  There  an  auxiliary 
pump  was  to  be  placed,  and  the  water  again  lowered  by 
the  air-lift  to  the  i,ooo-ft.  level.  Here  a  second  perma- 
nent pump  was  to  be  placed,  discharging  to  the  7OO-ft. 


PUMPING  DATA  379 

level.  Below  the  i,ooo-ft.  level  the  unwatering  was  to  be 
continued  as  far  as  possible,  a  pump  station  to  be  cut  out 
and  the  auxiliary  pump  to  be  removed  to  it,  the  remain- 
ing distance  to  be  freed  by  the  air-lift  again,  assisted  by 
a  small  sinking-pump  and  by  bailing. 

The  event  showed  that  the  capability  of  the  air-lift  had 
been  underestimated,  for  the  water  was  lowered  with  it 
from  the  700  to  the  i,ooo-ft.  level,  and  there  held  for 
five  weeks  while  the  second  pump  was  being  installed. 
During  this  period  of  installation  the  lift  was  handling 
25.6  cu.  ft.  per  min.  to  a  vertical  height  of  288  ft.,  with  a 
submersion  below  the  surface  of  the  water  of  152. 

Air  Lift. — The  air  was  supplied  by  a  pair  of  duplex 
single-stage  compressors,  driven  by  electricity,  and  giving 
a  united  displacement  of  9.91  cu.  ft.  free  air  per  revolu- 
tion. The  speed  was  constant  at  no  rev.  per.  min. 
These  compressors  were  placed  50  ft.  from  the  collar 
of  the  shaft,  and  delivered  the  air  through  a  receiver  and 
a  4-in.  air-column  to  the  mine.  The  column  for  the  air- 
lift was  of  7~in.  tubing,  with  flange  unions,  and  it  was 
lowered  down  the  shaft  on  skids  sliding  on  the  track  of 
the  skipway.  The  interior  air-pipe  was  2  inches. 

The  following  table  gives  the  record  for  a  part  of  the 
unwatering  period,  arranged  in  a  decreasing  series,  ac- 
cording to  the  ratio  of  submersion  to  lift.  By  'submer- 
sion' is  meant  the  vertical  depth  of  the  bottom  of  the 
air-pipe  below  the  surface  of  the  water,  and  by  'lift'  the 
vertical  height  of  the  discharge  above  the  surface  of  the 
water.  Tree  air'  is  assumed  to  equal  the  displacement 
of  the  compressor  cylinders. 

The  data  given  in  the  table  on  page  380  seem  conflicting, 
but  they  indicate  clearly  the  change  in  efficiency  of  air- 
lift work  due  to  increasing  submersion.  The  power  con- 
sumed was  determined  by  meter  readings  over  extended 
periods,  and  includes  all  the  mechanical  losses  in  the 
compressors  and  pipes. 


380  THE  ECONOMICS  OF  MINING 

Subsequently  a  4-in.  column  and  i-in.  air-pipe  were 
used  below  the  i,ooo-ft.  level,  with  the  results  given  at 
the  foot  of  the  table.  This  was  more  in  the  nature  of  an 
experiment  than  anything  else,  and  showed  clearly  the 
unsatisfactory  operation  under  such  an  extreme  condition. 

As  the  final   result  of  the  experience  gained  in  this 


fa  « ^  c 

„«:  «  <j  Cubic  Feet  *§  f«U  e 

jjj  w  '3  §  §  Per  Minute-  ^ 

i      1^  P     lj  II 

>  I        3*  •<  S  s| 

•So  «  8  5  c36 


1.86 

103 

191 

90 

541 

58.9 

9-2 

10.  1 

1.84 

97 

179 

90 

54i 

58.9 

9-2 

9  I 

i.  to 

1.64 
1.25 

3 

260 

185 
172 

87 
89 
84 

907 
54i 
541 

46.5 
56.5 

49- 

J9-5 
9.6 
ii. 

9^6 
10.7 
12.4 

.87 

174 

151 

90 

1090 

48.5 

22.5 

7-9 

.86 

204 

175 

90 

1090 

33- 

33-1 

6.3 

•  75 

186 

139 

89 

1090 

43- 

25-4 

.72 

189 

136 

89 

1090 

40.5 

26.9 

7- 

•65 

240 

157 

94 

1090 

31.9 

34-2 

6.7 

.65 

288 

190 

93 

1090 

25-9 

42.1 

6.2 

•59 

273 

161 

99 

1090 

29-5 

37- 

7.2 

•  59 

277 

163 

1090 

30. 

36.3 

6.8 

.58 

264 

152 

98 

IOOO 

30.4 

35-9 

6.7 

•  57 

280 

160 

97 

1000 

27.7 

39-4 

6.7 

.57 

281 

159 

97 

1090 

27.7 

39-4 

6-4 

•  53 

287 

153 

96 

1090 

27. 

40.4 

6.4 

t.25         196          48         60         1090          9  121.  i  1.8 


t  Below  i.ooo  ft.  level. 

work,  it  can  be  conceded  that  constant  volume  of  com- 
pressor delivery  (that  is,  constant  speed  of  motors),  and 
frequent  changing  submersion  and  lift  are  not  conducive 
to  economical  work;  exact  adjustment  of  air  vol- 
ume and  pressure  to  submersion  and  lift  are  essen- 
tials for  good  efficiency,  and  under  the  conditions  usual 
in  work  of  this  kind  are  not  obtainable.  Ror  regular  air- 
lift work,  as  from  deep  wells,  32  to  35%  is  spoken  of  as 


PUMPING  DATA  381 

quite  within  the  range  of  possibilities.  Notwithstand- 
ing the  low  efficiency,  however,  the  method  proved  itself 
highly  useful,  and  cost  less  in  power  and  plartt  combined 
than  any  other  that  could  have  been  applied. 

Electric  Pump. — The  electric  pumps  adopted  for  this 
installation  were  of  the  Aldrich  type,  manufactured  by 
the  Allentown  Rolling  Mills.  The  two  main  pumps  were 
5-plunger,  single-acting,  6-in.  diam.  by  12-in.  stroke,  with 
a  rated  displacement  of  66.7  cu.  ft.  per  min.  One  of  these 
was  placed  at  the  7oo-ft.  level,  before  the  unwatering 
was  commenced.  It  was  driven  by  two  4O-h.  p.,  44O-volt, 
induction  motors,  through  a  single  set  of  reduction  gears. 
The  other  pump  was  a  duplicate,  except  that  it  was 
driven  by  one  5O-h.  p.  motor.  The  respective  heads  for 
these  pumps  are  376  and  290  ft.  The  auxiliary  pump  was 
of  3-plunger  upright  type,  driven  by  a  4<>h.  p.  motor. 
The  current  was  brought  into  the  mine  by  lead-covered, 
armored,  three-conductor  cables.  As  originally  installed, 
the  cable,  as  far  as  the  7<DO-ft.  level,  was  of  a  carrying 
capacity  of  No.  I  wire  B.  &  S.,  and  below  that  level  of  No. 
3  B.  &  S.  It  was  found,  however,  that  the  lack  of  radia- 
tion caused  a  dangerous  rise  in  the  temperature  of  the 
upper  cable,  and  it  was  accordingly  reinforced  by  the  ad- 
dition of  another  one  of  No.  2.0  carrying  capacity. 

Under  full  load  these  pumps  have  given  a  power  effi- 
ciency of  72.3%,  based  on  a  100%  displacement  of 
the  plungers.  The  actual  displacement  of  the  plungers 
has  been  shown  by  tests  to  be  94.5%  of  the  theoretical, 
so  that  the  actual  horsepower  in  water  handled  is  69% 
of  the  power  delivered  to  the  conductors  at  the 
collar  of  the  shaft.  This  includes,  besides  the  conductor 
loss,  two  series  of  lamps  in  the  pump  stations. 

Cornish  Pumps. — The  Cornish-pump  system  presents 
the  following :  Stroke,  6  ft. ;  maximum  strokes  per  min., 
8f ;  I  plunger,  14-in.  diam.,  under  128  ft.  head,  4OO-ft. 
level;  I  plunger,  12-in.  diam.,  under  250  ft.  head,  7<X)-ft. 


382  THE  ECONOMICS  OF  MINING 

level;  i  plunger,  12-in.  diam.,  under  287  ft.  head,  1,000- 
ft.  level;  I  plunger,  12-in.  diam.,  under  230  ft.  head, 
i, 250- ft.  level. 

The  pump  is  driven  by  water,  under  288  ft.  kinetic 
head,  the  first  speed  reduction  being  by  belt  and  the  sec- 
ond by  gear.  The  rod  is  of  Oregon  fir,  12  in.  sq.,  and  is 
supported  by  rollers  in  the  customary  fashion.  There  is 
an  angle-bob  at  the  4OO-ft.  level,  where  the  shaft  changes 
dip,  and  an  ordinary  counterbalanced  operating  bob  on 
the  surface,  besides  a  balance  bob  at  the  Qoo-ft.  level. 

The  data  following  are  for  the  month  of  February, 
1904:  Horsepower  in  motive  water,  181 ;  horsepower  in 
water  thrown  (on  basis  of  full  displacement),  65;  ap- 
parent efficiency,  on  same  basis,  53.7%.  The  actual  water 
thrown  amounted  to  but  75%  of  the  displacement, 
because  of  the  necessity  of  drawing  back  water  from  the 
columns  into  the  pumps  for  considerable  periods,  in  order 
to  keep  the  pumps  'solid.'  This  is  automatically  done  by 
floats  and  'siphons/  and  no  special  measurements  were 
made  to  determine  the  actual  displacement  efficiency. 
This,  however,  with  such  slow-moving  parts,  should  cer- 
tainly be  above  95%,  with  valves  and  packing  in  good  con- 
dition, giving  51%  total  efficiency  for  the  pump.  There 
is,  however,  a  further  loss  due  to  the  stretch  of  the  rods 
and  to  lost  motion.  In  this  case,  at  the  i,25o-ft.  level, 
this  has  been  determined  to  be  3J  in.,  or  4^  per  cent. 

A  most  serious  drawback  to  the  use  of  the  Cornish  sys- 
tems of  pumps  lies  in  the  point  touched  upon  in  the  last 
paragraph :  The  fact  that  all  the  plungers  must  operate 
at  the  same  speed,  and  with  practically  the  same  length  of 
stroke,  makes  imperative  the  drawing  back  of  some  water 
to  make  up  deficiencies  at  some  of  the  pumps.  The 
plunger,  however,  so  long  as  it  is  raising  to  the  next  lift, 
is  doing  its  work  against  the  full  pressure  the  whole  time, 
even  though  nine-tenths  of  its  water  is  being  drawn  back. 
This  is  inherent  in  the  system,  and  can  no  more  be 


PUMPING  DATA  383 

avoided — though  it  may  be  minimized — than  the  change 
in  the  rate  at  which  water  'makes'  in  the  various  levels 
can  be  prevented. 

It  would  be  interesting  were  data  at  hand  for  similar 
work  by  other  styles  and  systems  of  pumps,  but  it  seems 
highly  improbable  that  efficiencies  as  high  as  69%  can 
be  obtained  by  other  than  those  electrically  driven,  with 
the  possible  exception  of  pumps  using  re-heated  air. 


THE  COST  OF  MINING 

(May   25,    1905.) 

The  Editor: 

SIR — I  am  a  reader  of  your  valuable  JOURNAL,  and 
derive  pleasure  and  profit  thereby.  Among  the  many 
things  of  interest  it  contains,  to  me  there  are  none  more 
so  than  the  reports  of  the  cost  of  mining;  but  in  those 
reports  we  are  never  told  what  the  cost  is  of  those  articles 
that  make  up  the  per  ton  cost ;  hence,  as  comparative  fig- 
ures, they  are  not  very  reliable.  There  is  a  great  differ- 
ence in  the  price  of  mining  supplies  if  bought  in  large  or 
small  quantities.  So  also  do  the  hours  and  wages  paid  differ 
in  different  localities,  as  do  all  other  conditions  affecting 
the  character  of  operations.  In  giving  those  reports  to 
the  public,  the  character  and  hardness  of  the  rock  should 
be  given,  as  well  as  cost  of  material;  in  fact,  all  things 
that  add  to  the  final  expenditure.  The  mine  owner  reads 
the  report  perhaps  as  keenly  as  does  the  mine  superinten- 
dent, and  if  it  happens  that  he  has  had  similar  work  done 
on  his  property  at  a  greater  cost,  he  will  wonder  why  his 
man  could  not  do  it  as  cheaply  as  the  other  fellow,  and 
thus  many  a  good  man  may  get  'knocked/ 

This  report  is  not  intended  as  an  example  of  how 
cheap  this  kind  of  work  can  be  done  (it  cost  $13.50  less 
per  foot  than  the  previous  200  ft.),  but  is  more  in  the 
nature  of  a  memorandum  for  the  young  mine  superin- 
tendent who  may  not  have  had  the  experience  in  shaft- 
sinking. 

Our  supplies  were  shipped  from  Butte,  30  miles  by 
rail,  thence  8  miles  by  wagon  over  a  rough  mountain  road, 
grade  200  ft.  to  the  mile.  When  we  started  work 
on  the  shaft,  it  was  already  down  650  ft.  The  work  in- 
volved in  getting  ready  to  sink,  such  as  placing  the  sta- 
tion pump  in  a  proper  place,  putting  in  a  bulkhead,  and 
cleaning  out  the  mud — 8  ft.  of  it — from  the  bottom  of 


THE  COST  OF  MINING 


385 


the  shaft,  cost  over  $200,  which  was  charged  up  to  the 
cost  per  foot  of  sinking.  The  size  of  the  shaft  where  we 
started  is  9  ft.  by  4  ft.  6  in.,  the  new  work  is  9  ft.  by  4  ft. 

Supplies  for  Sinking  Shaft  214  Feet. 

4   kegs    4od    nails @     $3-63]^  $14-52 

21    round-point    shovels    '         0.84  17-64 

236    -HJ    by  8-in.   lag  screws "       5.50  12.98 

20    Ib.    ^-in.    cut   washers '        »      1.50 

4  plum   bobs '        ....  2.00 

200  feet  plumb  line '        ....  0.25 

6   mine   torches    '        0.75  4.50 

Wicking    for    torches '        ....  0.15 

300    Ib.  i-in.  round  soft  steel  for  hanging  bolts  '        3.40  10.20 

48   i-in.  square  nuts,   44  Ib 0.07^  3.30 

48   i-in.  cast  washers,  32  Ib 0.05  1.60 

9  axe    handles 0.35  3.15 

2    axes    0.85  i  .70 

2    doz.    pick    handles 0.27  6.48 

i    doz.    36-in.    sledge   handles 0.21  1.52 

100  Ib.    axle  grease — for  cartridges 0.06  6.00 

415  Ib.  of  2-lb.  T  rails — for  surface  track..              2.75  11.42 

50    Ib.    track    spikes "       0.04  2.00 

2,345    H>-    blacksmith's    coal "     16.50  19.38        $120.29 

i%y2    boxes   candles — 2040    Snowflake "  3.00  $55.50          $55-50 

2,600   Ib.    powder — Repauno   gelatine '  14-25  370.50 

10,700   ft.    triple  tape   fuse '  0.46  49.42 

2,400    caps — Lion    brand... '  0.75  18.00          437.92 

50,000    ft.    timber    and    plank "     17.50  $875.00 

The  ratio  of  plank  and  square  timber 
used  was,  square  timber  55.36%;  2-in. 
plank,  44.64%. 

Labor. 

Blacksmith,    57    days @     $4.00       $228.00 

Blacksmith   helper,   24^4    days: '        3.00  72.75          300.75 

Carpenter,    77    days "  4.50                           $346.50 

Superintendent     556.92 

Contractors    3,424.00 

Pumping   and   hoisting  account 1,916,05 

Plant  maintenance   and   ad  jitions   account 534-79 

$8,567.7* 

Hardware   supplies    $0.561916  per  foot 

Candles    0.259345 

Ammunition     2.046355 

Timber — except    guides    4.0887 

Pumping  and  hoisting   account 8.9535 

Plant  maintenance   and   additional   account....  2.4986 

Blacksmith    work    1.405374 

Carpenter    work    1.61916 

Superintendent     * 2.60 

Contract  price    16.00 

$40.03  "     " 

10  in.,  all  timber  10  by  lo-in.  fir.     For  hoisting  the  rock 
we  used  a  bucket  with  the  bail  pivoted  below  the  center, 
and  for  lack   of  height  under  the  sheave  it  was  hung  just 
2  ft.  under  the  cage;  to  dump  it  we  hinged  a  door  on 


386  THE  ECONOMICS  OF  MINING 

the  opposite  side  of  the  shaft  from  that  on  which  we  caged 
the  cars ;  on  this  door  we  placed  the  car  and  dumped  the 
rock  into  it  from  the  bucket.  We  used  the  cage  to  lower 
and  hoist  men,  also  to  hoist  rock  from  the  4OO-ft.  level, 
where  we  had  two  shifts,  of  two  men  each,  running  a 
drift.  While  the  mine  made  considerable  water,  the  shaft 
was  quite  free  from  it ;  what  there  was  came  from  near 
the  surface  and  amounted  to  50  gal.  per  hour,  which  we 
hoisted  to  the  6oo-ft.  station  and  dumped  it  into  a  launder, 
which  carried  it  to  the  mine  sump.  We  started  to  sink 
November  29,  and  finished  February  19.  The  shaft  being 
well  in  the  foot-wall  the  granite  was  very  hard  for  160 
ft. ;  the  remainder,  while  it  was  good  stiff  ground,  broke 
well.  The  contract  price  was  $16  per  foot,  the  company 
furnishing  all  material ;  there  were  four  contractors,  who 
employed  eight  others,  thus  making  four  men  per  shift. 
We  used  two  0-32  Ingersoll-Sergeant  rock-drills.  When 
sending  up  rock,  one  of  the  shaft  men  acted  as  top  car- 
man, for  which  I  allowed  the  contractors  $3.50  per  shift ; 
this  man  also  handled  the  rock  from  the  drift,  so  that 
when  there  was  no  rock  coming  out  of  the  shaft  we  had 
no  top  man  to  pay.  We  found  this  plan  advantageous 
both  to  the  company  and  contractors,  for  the  man  that 
worked  on  top  got  $4,  the  same  as  the  men  on  the  bottom, 
hence  he  got  a  'move  on  him/  The  distance  sunk — 214 
ft.@$i6 — cost  $3,424 ;  to  which  add  $357  for  top  carman  ; 
dividing  by  864,  the  number  of  shifts,  gives  $4.37  per 
shift  per  man.  The  top  work  was  charged  to  pumping 
and  hoisting  account.  JAMES  HUMES. 

Basin,  Mon.,  May  15,  1905. 


THE  COST  OF  MINING 

(Editorial,  June  8,   1905.) 

The  contributions  to  this  discussion  have  not  been 
numerous,  but  they  have  come  from  men  entitled  to  speak 
with  authority.  On  the  main  points  there  has  been  prac- 
tical unanimity;  for  instance,  the  need  of  a  simple  but 
comprehensive  system  of  accounts  and  the  subordination 
of  the  cost  of  mining  to  the  vital  question  of  profit  per 
ton  of  ore.  Among  the  factors  which  explain  the  marked 
differences  of  cost  made  apparent  by  the  reports  of  min- 
ing companies,  two  are  specially  notable;  we  refer  to  the 
effect  of  sorting  and  the  efficiency  of  labor.  In  districts 
where  mining  operations  follow  small  and  irregular  seams 
of  rich  ore  scattered  through  a  large  mass  of  material  of 
low  grade,  it  is  a  fundamental  problem  whether  to  work 
the  rich  ore  separately,  obtaining  a  clean  high-grade  prod- 
uct, or  to  break  down  the  entire  mass  of  mineralized  lode, 
with  subsequent  sorting  at  surface.  It  is  a  question 
whether  the  maximum  profit  can  be  secured  by  breaking 
the  rich  streak  by  itself  (that  is,  to  'resue')  or  to  min- 
imize the  cost  of  breaking  by  taking  the  full  width  in  one 
blasting  operation.  In  the  one  case  the  expense  incurred 
underground  is  greater;  in  the  other,  sorting  supervenes 
at  surface.  The  choice  of  methods  will  depend  largely 
upon  the  contents  and  character  of  the  extra  width  of  rock 
broken  down  with  the  main  ore-streak.  Here  is  where 
the  'cost  of  mining'  trembles  in  the  balance.  Each  case 
must  be  worked  out  individually,  according  to  particular 
conditions;  and,  in  the  weighing  of  the  factors  affecting 
the  final  profit,  there  comes  the  test  of  good  management. 

The  quality  of  the  labor  employed  is  another  basic  fac- 
tor. It  is  hardly  realized,  by  shareholders  and  directors, 
how  great  a  difference  in  the  cost  of  mining  is  created  by 
inefficient  labor.  In  this  respect  the  mines  which  are 
able  to  use  the  contract  system  and  those  which  are  free 


388  THE  ECONOMICS  OF  MINING 

from  the  unintelligent  tyranny  of  the  miners'  unions  have 
a  great  advantage  over  those  that  are  dominated  by  walk- 
ing delegates  and  are  compelled  to  employ  unskillful  work- 
men at  'day's  pay.'  Thus  the  Joplin  and  the  Flat  River 
districts  in  Missouri  afford  a  strong  contrast.  Among 
other  aspects  of  the  labor  problem,  it  is,  we  think,  a  safe 
generalization,  that  mine  operators  find  it  economical  to 
make  the  best  of  whatever  native  labor  may  be  available. 
In  Korea,  in  Mexico,  in  Burma,  in  most  countries  where 
the  natives  can  be  trained  to  do  the  work  in  mines,  it  is 
cheaper  to  educate  them  to  the  American  or  European 
methods  than  it  is  to  introduce  the  high-priced  workmen 
of  more  advanced  communities,  because  the  extra  skill 
secured  thereby  is  rarely  compensation  for  the  climatic 
effects  on  foreigners  and  the  dependence  upon  men  who 
cannot  be  replaced  save  with  great  loss  of  time  and  the 
incurring  of  a  one-sided  obligation.  In  all  comparisons 
initiated  between  working  costs  obtained  under  labor  con- 
ditions so  diverse  as  those  of  the  United  States,  South 
Africa,  Mexico,  and  Western  Australia,  it  is  necessary  to 
have  regard  to  this  factor. 

In  a  recent  issue  Mr.  Philip  Argall  made  some  perti- 
nent remarks  concerning  the  ability  to  discover  ore  in  a 
mine  as  being  at  least  as  precious  as  that  of  keeping  down 
the  costs  of  operation  after  the  ore  has  been  found.  He 
quoted  an  instance  the  identity  of  which  it  was  not  diffi- 
cult to  recognize.  Undoubtedly,  skill  in  seeking  ore- 
bodies  is  one  of  the  most  difficult  to  appraise,  because  it 
must  be,  to  a  large  extent,  dependent  upon  accident; 
nevertheless,  it  is  well  for  those  in  control  of  mines — 
especially  such  as  maintain  an  expensive  organization — 
to  realize  that  no  quality  is  so  directly  contributory  to 
profitable  mining  as  the  instinct  or  experience  that  enables 
a  superintendent  to  follow  the  ore  or,  when  it  fails,  to  pick 
up  a  new  trail  of  ore  deposition.  That  is  why  'tributers' 
or  lessees  make  an  expensive  mine  management  look  silly 


THE  COST  OF  MINING  389 

when  they  take  over  a  mine  supposed  to  be  exhausted  and 
forthwith  uncover  valuable  ore-shoots.  Occasionally,  the 
increase  in  output,  coincident  with  the  tributer's  regime, 
is  traceable  to  patches  of  rich  ore  hidden  by  miners  pre- 
viously on  May's  pay' ;  but,  as  a  rule,  it  is  simply  the  re- 
sult of  the  initiative  displayed  by  men  who  are  no  longer 
working  for  a  company,  but  for  themselves.  Any  method 
of  management  which  utilizes  this  characteristic  of  hu- 
manity is  likely  to  induce  economy  in  the  cost  of  op- 
eration. 


DEEP  MINING 

(Editorial,  June   i,   1905.) 

The  finding  of  gold  at  4,161  feet  in  a  Bendigo  mine  is 
affording  subject  for  comment,  in  Australia  particularly. 
Murchison's  dictum  regarding  the  non-persistence  of  gold- 
quartz  veins  is  resurrected,  and  that  worthy  geologist, 
but  unfortunate  generalizer  on  mining  matters,  is  held  up 
to  ridicule.  When  Murchison  wrote,  50  years  ago,  gold 
mining  afforded  no  data  for  large  statements  regarding 
persistence;  and  even  today  the  discussion  of  the  subject 
is  academic  unless  it  is  tied  to  the  economic  aspect ;  in 
other  words,  veins  may  or  may  not  persist  to  .depths  be- 
yond man's  reach;  the  point  is,  that  man  will  make  no 
effort  to  follow  them  if  they  do  not  pay.  It  is  the  prob- 
lem of  the  persistence,  not  of  gold-quartz,  but  of  pay  ore. 
Thus,  our  esteemed  contemporary,  the  Australian  Mining 
Standard,  says  that  "the  question  (of  depth  in  mining) 
is,  of  course,  largely  governed  by  the  cost  of  working." 
It  is  wholly  governed  by  it ;  mining  is  not  a  scientific  pur- 
suit, but  a  money-making  business,  based,  of  course,  on 
the  application  of  scientific  knowledge.  That  is  why  emi- 
nent geologists  occasionally  go  astray. 

It  is  interesting  to  know  that  quartz  carrying  native 
gold,  probably  in  coarse  particles  visible  to'  the  eye,  has 
been  intersected  by  man's  burrowing  at  a  depth  of  three- 
quarters  of  a  mile ;  but  this  does  not  imply  profitable  min- 
ing at  that  depth.  The  ore  in  the  New  Chum  Railway 
mine,  at  Bendigo,  was  cut  by  a  winze  sunk  305  ft.  below 
a  crosscut  at  3,856  ft. ;  the  discovery  is  the  result  of  ex- 
pensive exploration.  The  last  profitable  mining  was  at 
3,350  ft.  We  question  whether  the  orebody  will  prove 
remunerative,  simply  because  we  are  aware  that  mining 
at  Bendigo,  on  the  whole,  has  not  been  profitable  below 
2,500  ft.  or  even  at  a  shallower  horizon,  despite  oc- 
casional patchy  discoveries  and  a  few  orebodies  of  such 


DEEP  MINING  391 

dimensions  as  to  pay  spasmodic  dividends  which,  while 
they  have  lasted,  obliterated  the  memory  of  a  much 
longer  series  of  calls.  Even  in  South  Africa  the  romance 
of  an  indefinitely  deep  search  for  the  'banket,'  through 
shafts  planned  to  go  from  one  to  two  miles  deep,  has  paled 
of  late.  It  is  recognized  that  the  profitable  character  of 
the  'reefs'  decreases  in  depth.  As  we  said  two  years  ago, 
even  Methuselah  died.  It  is  as  well  to  get  alongside  of  fact ; 
the  more  money  is  wasted  on  academic  theories,  the  less  is 
available  for  sound  mining.  Meanwhile,  observant  men 
no  longer  repeat  the  fallacy  of  enrichment  in  depth,  or 
even  of  indefinite  persistence  of  pay  ore;  but,  recogniz- 
ing conditions  as  disclosed  in  world-wide  mining,  they 
are  extending  the  horizon  of  profitable  operations  by  re- 
ducing costs.  In  1850  a  lode  would  have  been  consid- 
ered 'played  out'  if  the  yield  decreased  from  5  oz.  of  gold 
at  surface  to  2  oz.  at  200  ft.,  because  it  would  then  have 
ceased  to  be  profitable.  Twenty  years  ago  people  were 
glad  to  begin  with  a  yield  of  an  ounce ;  and,  if  the  ore 
reached  to  1,000  ft.  before  it  fell  to  half  an  ounce,  they 
were  well  satisfied.  Nowadays  we  can  go  deeper;  and, 
though  the  diminution  continues,  we  can  snatch  profits 
from  material  yielding  less  than  a  quarter  of  an  ounce, 
thereby  extending  the  economic  horizon  another  1,000  ft. 
This  is  merely  an  illustration,  but  something  of  the  sort 
really  does  occur  in  practical  work;  and  it  suffices  to 
emphasize  the  conclusion,  that  if  you  want  to  know  aoout 
the  structural  peculiarities  and  distribution  of  ore  in  a 
lode,  you  do  well  to  ask  the  geologist;  if  you  want  to 
know  whether  a  mine  will  pay,  and  how  long,  you  had 
better  ask  the  man  who  has  managed  mines. 


NOTES  ON  MINE  REPORTS 

BY  CHESTER  F.  LEE. 

(June    8,    1905.) 

General  Principles. — A  report  should  be  clear,  definite 
and  complete.  Want  of  clearness  in  statement  is  a  fatal 
defect.  Muddy  statements,  confusion  of  ideas  and  run- 
ning one  subject  into  another  are  worse  faults  in  this 
class  of  writing  than  any  other.  Clear  expression  results 
from  clear  thought.  Everything  should  be  figured  out 
and  thought  out  beforehand,  all  doubts  settled,  and  then 
a  statement  made  in  as  few  and  simple  words  as  may  be. 
All  that  is  to  be  said  on  any  one  head  should.be  said  at 
one  place;  part  of  a  subject  in  one  place  and  part  in 
another  leads  to  confusion.  Definiteness  is  equally  essen- 
tial. Hazy  and  ambiguous  statements  as  to  essential 
points  are  inadmissible.  They  are  signs  of  incompetence 
or  a  desire  to  mislead.  A  man  who  knows  his  business 
and  is  honest  will  make  statements  in  a  form  that  cannot 
be  misunderstood. 

Many  reports  otherwise  good  are  fatally  defective  for 
want  of  some  detail  essential  to  the  complete  understand- 
ing of  the  proposition.  Judgment  is  here  necessary  to 
distinguish  between  the  trivial  and  unessential  and  that- 
which  is  vital  and  apposite.  Nothing  can  be  omitted 
which  is  a  link  in  the  chain  of  facts  that  leads  to  the  con- 
clusions stated,  or  is  essential  to  their  clear  comprehen- 
sion ;  but  nothing  should  be  included  that  is  not  essential 
to  this  end.  That  mining  is  the  business  of  making 
money  out  of  ore  should  never  be  lost  sight  of.  The  ob- 
ject of  a  report  is  primarily  commercial ;  it  is  a  matter  of 
business.  Such  technical  matter  as  is  necessary  to  clear- 
ness and  completeness  has  place,  but  nothing  further. 
The  temper  in  which  the  matter  should  be  approached  is 
judicial.  No  personal  bias  or  feeling  should  enter.  All 
should  be  cold,  hard  facts,  and  the  conclusions  such  as 


NOTES  ON  MINE  REPORTS  393 

can  be  justly  drawn  from  the  facts  stated.  Everything 
should  be  ascertained  with  exactness,  nothing  guessed 
at  or  left  to  chance,  and  no  stone  left  unturned  to  check 
conclusions  in  all  possible  ways.  Pains  taken  in  this 
last  particular  will  save  many  a  costly  blunder. 

Divisions. — Requirements  will  vary  greatly,  but  the  fol- 
lowing heads  (or  their  equivalents)  will  cover  most  cases, 
and  often  many  of  them  can  be  dispensed  with.  The  or- 
der of  treatment  is  not  insisted  on: 

1.  Conclusions 

2.  Situation  (Geography) 

3.  Claims  (Surface  extent) 

4.  Title 

5.  History 

6.  Orebearing  Zone 

7.  Character  of  Deposit 

8.  Geology 

9.  Mineralogy 

10.  Developments  (Workings) 

11.  Production 

12.  Ore  Developed 

13.  Ore  Values 

14.  Treatment  (Process  and  Handling) 

15.  Costs  and  Proceeds 

16.  Plant 

17.  Working  Methods 

18.  Assays  and  Sampling 

19.  Maps 

20.  Miscellaneous 

21.  Appendix 

22.  Index 

Conclusions. — It  is  the  conviction  of  the  writer  that  the 
conclusions  should  be  the  first  thing  in  a  report.  The 
busy  man  wants  to  know  nothing  more,  and  all  readers 
get  at  the  meat  of  the  matter  sooner  from  knowing  the 
net  results  at  the  outset.  An  engineer  of  prominence 
requires  all  reports  submitted  to  him  to  have  the  con- 
clusions reduced  to  the  following  terms : 

Ore  zone  ft.  long  by ft.  wide  by ft.  deep. 

Ore-shoots  in  the  above  (enumerating  each)   ft.  long  by 

ft.  wide  by ft.  deep.     Ore  can  be  mined  for  $ 

per  ton.     Ore  can  be  treated  for  $ per  ton.     By  

process.    Per  cent  of  extraction Requires  assay  value  to 

pay  of Assay  value  found  


394  THE  ECONOMICS  OF  MINING 

It  is  not  possible  to  fit  all  cases  to  so  rigid  a  form,  but 
it  illustrates  the  requirements  of  those  who  want  things 
boiled  down  to  the  last  degree.  They  require  reports  to 
be  clear,  crisp,  net.  Conclusions  should  be  put  in  as  few 
and  clear  words  as  possible;  too  much  pains  cannot  "be 
taken  in  making  them  at  once  a  summary  and  epitome  of 
the  whole.  The  conclusions,  though  standing  first,  are 
of  course  written  last. 

Situation. — Under  this  caption  come  such  matters  as 
geographical  location,  accessibility,  transportation  facili- 
ties, topography  and  climate. 

Claims. — Claims  or  surface  extent  of  property  should 
be  fully  set  forth  and  a  complete  map  prepared,  showing 
every  possible  detail  of  surface  boundaries  and  divisions, 
survey  lines,  contours,  surface  improvements,  buildings, 
etc.  A  good  set  of  photographs  is  an  aid  to  clearness. 

Title. — Title  to  the  property  under  examination  is  prop- 
erly matter  for  a  lawyer's  opinion,  but  if  it  is  merely  pos- 
sessory, or  rests  on  patents  or  its  equivalent,  so  state. 

History. — The  salient  points  in  the  history  of  the  prop- 
erty should  be  next  given.  Points  of  failure  are  often 
more  interesting  than  those  of  success.  To  know  what  to 
avoid  is  half-way  to  know  what  to  do.  Properties  of  any 
age  are  sure  to  have  gone  through  several  stages  and 
many  vicissitudes,  of  interest  to  the  prospective  purchaser. 

Ore  Zone. — By  'ore-bearing  zone'  is  meant  the  extent 
of  ground  in  which  ore  may  reasonably  be  looked  for.  A 
succinct  statement  of  the  proportion  of  the  property  likely 
to  yield  a  profit  is  desirable.  Evidence  on  this  head  is 
looked  for,  not  only  in  the  ground  in  question,  but  in 
near-by  property  and  throughout  the  district,  if  need  be. 

Character  of  Deposit. — Without  a  fair  working  knowl- 
edge of  ore  deposits  in  general  and  an  intimate  acquain- 
tance with  the  deposit  under  discussion  in  particular, 
nothing  worthy  can  be  set  down.  An  outline  only  can  be 
given  of  what  suitable  treatment  of  this  section  requires. 


NOTES  ON  MINE  REPORTS  395 

It  would  include  the  origin  and  form  of  the  deposit,  the 
physical  and  geological  character  of  the  walls  or  limiting 
change  of  formation  or  structure;  the  strike  and  dip  of 
the  deposit ;  the  occurrence  and  frequency  of  shoots,  chim- 
neys or  other  enriched  areas,  their  origin,  form,  dip,  pitch, 
etc.  In  general,  it  may  be  said  that  every  characteristic, 
peculiarity  and  salient  feature  of  the  orebody  should  be 
described.  Occasional  sketches  are  an  aid  to  clearness. 

Geology. — The  essential  points  of  the  local  geology 
should  be  carefully  examined  and  succinctly  stated ;  not  a 
scientific  treatise,  but  a  plain  statement  of  whatever  af- 
fects the  economic  aspects  of  the  case  is  the  thing.  Dikes, 
faults,  slips,  cross-courses,  change  of  formation  and  sim- 
ilar phenomena  should  be  described,  and  their  influence 
on  the  size,  continuity,  mineralization,  etc.,  of  the  orebody 
considered.  Suitable  maps  and  sketches  are  helpful  in 
showing  these  details. 

Mineralogy. — This  will  comprise  an  enumeration  of  the 
minerals  in  the  ore,  and  in  the  gangue  and  walls ;  a  dis- 
cussion of  the  chemical  and  physical  changes  these  min- 
erals have  undergone,  oxidations,  alteration  products,  etc. 
Values  in  the  various  minerals  to  be  determined,  and  a 
differentiation  made  between  what  is  profitable  and  what 
is  not. 

Developments. — A  detail  account  of  all  the  workings  of 
the  mine,  with  the  results  that  have  been  accomplished. 
Here  again  a  good  set  of  maps  is  indispensable.  Gener- 
ally a  vertical  longitudinal  section  of  the  deposit  will  show 
most  of  the  openings,  but  often  frequent  cross-sections 
are  necessary.  A  map  of  the  whole  mine  in  plan  is  the 
basis  for  this  work. 

Production. — This  is  best  presented  in  tabulated  form ; 
dates,  character  of  ore,  parts  of  the  mine  producing  it, 
values  in  the  several  metals,  total  gross  values,  deductions, 
costs  and  the  like,  in  as  full  detail  as  is  possible.  A  concise 
history  of  the  output  makes  the  text  of  this  heading. 


396  THE  ECONOMICS  OF  MINING 

Ore  Developed. — 'Ore  developed'  covers  what  used  to 
be  designated  'ore  in  sight/  The  quantity  of  ore  ready 
for  extraction  and  exposed  on  four  sides  should  be  listed 
under  'developed  ore';  what  is  exposed  on  two  or  three 
sides  is  'probable  ore,'  and  everything  else  comes  under  a 
consideration  of  the  'future  of  the  mine/  or  some  similar 
phrase.  As  much  of  this  should  be  tabulated  as  possible. 

Ore  Values. — The  values  found  in  the  orebodies  from 
the  systematic  sampling  of  the  mine  should  come  next,  in 
tables,  with  such  comment  as  is  indispensable  to  lucidity. 

Treatment. — The  handling  of  the  ore  from  the  time  it 
is  broken  in  the  mine  (and  even  the  method  of  breaking) 
until  the  finished  product  is  marketed  should  be  given  in 
detail.  When  more  than  one  form  of  handling  or  treat- 
ment is  possible  they  should  be  compared,  and  their  rela- 
tive efficiency,  cost,  saving,  etc.,  given.  The  percentage 
saved,  and  the  losses  and  their  causes  in  the  various  steps 
of  the  process,  should  be  given  in  full. 

Costs. — Costs  are  divided  into  mining,  metallurgical 
and  general.  Each  should  be  given  in  detail,  with  analy- 
sis of  all  elements  that  produce  them,  under  divisions  of 
labor,  supplies,  etc.  With  costs,  naturally  comes  a  consid- 
eration of  proceeds.  Metallurgical  processes,  with  their 
losses  and  proceeds,  are  set  down  in  one  column  and  the 
values  of  the  metals  treated,  wasted  and  saved  in  another. 
It  is  here  that  the  net  value  of  the  ore  comes  out.  This 
is  the  main  point  of  the  report,  and  appears  as  such  in  the 
initial  paragraph  giving  the  conclusions. 

Plant. — A  description  of  the  plant  and  other  surface 
improvements  comes  next,  with  such  alterations  and  addi- 
tions thereto  as  may  be  advised.  Questions  as  to  ade- 
quacy of  plant  already  installed,  and  of  relation  of  plant 
to  output  and  ore  reserves,  are  here  discussed. 

Working  Methods. — An  outline  plan  of  opening  up  the 
property  if  not  already  developed,  and  a  discussion  of 
working  methods  underground,  is  indispensable. 


NOTES  ON  MINE  REPORTS  397 

Assay  and  Sampling. — The  table  of  assay  results  and 
the  calculations  of  averages  should  be  relegated  to  an 
appendix  if  there  is  any  number  of  them.  Method  of 
sampling  should  be  clearly  set  forth  in  detail,  so  that  a 
judgment  can  be  formed  of  the  thoroughness  of  the  work 
and  of  the  justness  of  the  conclusions  reached. 

Maps. — The  essential  maps  are  :  Surface  plan;  the 
workings  in  plan;  a  vertical  longitudinal  section  of  the 
orebody.  To  these  may  be  added  a  key-map  of  the 
region  where  the  property  is  situated,  a  geological  section 
of  the  immediate  vicinity,  plans  of  levels  separately,  cross- 
sections  of  orebodies  at  typical  points,  plans  of  surface 
improvements,  plans  of  stopes  at  different  stages,  details 
of  timbering,  etc.,  assay  plans,  and  an  almost  infinite 
variety  of  other  special  and  detailed  drawings. 

Miscellaneous. — All  the  collateral  information  useful 
in  connection  with  the  property  not  strictly  belonging 
elsewhere  can  be  collected  here. 

Appendix. — After  the  body  of  the  report  all  additional 
data  should  be  placed,  as :  Detailed  lists  of  assays  and 
calculations  of  average  value,  tests  made  in  connection 
with  treatment  investigations,  smelter  or  mill  returns  in 
detail,  lists  of  surface  improvements,  buildings,  etc.,  in- 
ventories of  machinery,  outfit,  supplies  and  the  like. 
Statements  and  matters  that  are  purely  financial  should 
be  in  an  entirely  separate  document. 

Index. — Any  report  of  more  than  four  pages  without 
an  index  or  table  of  contents  is  faulty  to  that  extent. 


MINE  REPORTS 

(Editorial,   June    15,    1905.) 

The  'Notes  on  Mine  Reports,'  which  appeared  in  our 
last  issue,  may  awaken  expression  of  diverse  opinions. 
Mr.  Chester  F.  Lee  has  many  sensible  things  to  say ;  one 
of  these  we  venture  to  emphasize.  It  is  true  that  "a  man 
who  is  honest  will  make  statements  in  a  form  that  cannot 
be  misunderstood."  The  spirit  of  science  does  demand 
straight  thinking  and  the  direct  expression  of  ideas;  the 
application  of  science  to  mining  asks  for  the  same  recti- 
tude of  mind.  Equivocation,  ambiguity  and  indirection 
of  any  sort  in  a  mine  report  are  unscientific  even  when 
unintentional ;  but  when  deliberately  adopted,  they  are 
unprofessional.  We  have  no  patience  with  a  report  writ- 
ten in  such  manner  that,  whether  the  mine  either  does 
half  as  well  or  yields  twice  as  much  as  the  engineer 
vaguely  predicts,  it  can  yet  be  interpreted  as  a  vindication 
of  correct  judgment.  Such  work  is  mere  hocus-pocus, 
which  evades  responsibility  and  plays  the  fool  with  the 
client  or  company  paying  for  the  report;  it  is  dishonest, 
in  that  it  is  a  failure  to  "deliver  the  goods" — in  this  case, 
an  opinion  that  cannot  be  misunderstood.  We  have  seen 
the  development  of  this  tendency  among  engineers  more 
careful  of  their  reputation  than  of  their  duty.  It  is  a  bad 
practice ;  the  engineer  who  receives  $5,000  for  his  exam- 
ination and  report  is  paid  ten  times  as  much  as  the  man 
whose  fee  is  $500,  for  the  simple  reason  that  he  has  a 
well-earned  reputation  which  he  puts  to  risk  every  time 
he  truthfully  expresses  his  judgment  or  gives  his  ap- 
praisal of  a  mine.  The  physical  exertion,  the  mental  exer- 
cise, the  time  consumed  are  much  the  same  in  both  cases ; 
in  fact,  the  junior — or  the  man  with  the  lesser  reputation 
— is  apt  to  expend  more  muscle,  nerve  tissue  and  time 
than  he  of  the  big  fees;  the  valid  reason  for  paying  the 
one  ten  times  more  than  the  other  is  that  the  former  has 


MINE  REPORTS  399 

already  won  a  reputation  which  he  imperils  each  time  his 
judgment  is  put  to  the  test.  If  he  plays  round  the  sub- 
ject, gives  conclusions  in  magniloquent  but  ambiguous 
phrases,  shifts  his  responsibility  to  subordinates,  or  in  any 
way  refuses  to  fulfill  his  bargain — the  opinion  which  faces 
the  facts  and  accepts  the  responsibility  for  an  experi- 
enced judgment — he  is  dishonest.  The  statement  quoted 
from  Mr.  Lee  is  prefaced  with  the  clause  "a  man  who 
knows  his  business";  and  this  proviso  (interpreted  in  a 
sense  Mr.  Lee  does  not  intend)  anticipates  the  reply  of 
those  who  adopt  the  methods  just  criticised;  they  will 
say  that  they  know  their  business  well  enough  to  "get  out 
from  under"  when  any  responsibility  overhangs  them ; 
they  deem  it  clever  to  get  large  fees  for  the  simulacra  of 
opinions,  and  they  consider  it  worldly-wise  to  "take  care 
of  their  reputations"  by  avoiding  statements  for  which 
they  can  be  brought  to  book.  But  such  conduct  is  foreign 
to  the  right  spirit  of  the  engineering  profession ;  it  is  not 
even  sound  business ;  it  is  the  attitude  of  a  tricky  trades- 
man. 


THE  INTERVAL  BETWEEN   LEVELS 

(Editorial,  June  22,  1905.) 

The  proper  distance  between  levels  is  a  practical  point 
that  is  often  presented  to  the  judgment  of  mine  managers. 
Those  who  avoid  the  fatigue  of  thinking,  plan  their  main 
drifts  100  ft.  apart,  because  a  century  is  a  neat  number 
and  it  represents  an  interval  which  is  honored  by  usage, 
if  by  nothing  else.  However,  there  are  others  who  are 
not  the  slaves  to  empiricism  of  this  unintelligent  kind.  In 
South  Africa,  it  has  been  found  that  economy,  without 
loss  of  efficiency,  is  gained  by  increasing  the  distance 
between  levels.  Before  the  war,  150  ft.  was.  the  interval 
generally  adopted ;  since  then,  this  has  been  doubled  in 
certain  instances,  such  as  the  Roodepoort  United  mine, 
and  there  is  now  talk  of  attaining  a  maximum  of  600  ft., 
measured  on  the  dip  of  the  lode.  A  saving  in  mining  cost 
of  from  one  to  three  shillings  per  ton  is  anticipated. 

The  distance  necessary  between  working  levels  depends, 
in  the  first  instance,  upon  the  character  of  a  lode.  On  the 
Rand,  the  beds  of  'banket'  are  fairly  regular  in  their  be- 
havior and  in  their  gold  content ;  therefore,  frequent  drifts 
are  not  needed  for  exploratory  purposes ;  the  ground  be- 
tween any  two  levels,  that  are  300  ft.  apart,  can  be  as- 
sumed to  possess  average  characteristics  to  an  extent 
impossible  in  most  of  the  variable  veins  which  represent 
the  ore  deposits  of  other  regions.  Levels  60  ft.  apart 
are  common  in  mines  based  upon  thin  veins  of  rich  gold- 
bearing  quartz,  subject  to  eccentricity  of  dip  and  the  sud- 
den changes  due  to  short  ore-shoots.  The  ratio,  between 
the  cost  of  driving  a  drift  in  rich  ore  and  the  value  of  the 
output  to  be  obtained  from  the  stopes  overhead,  constitutes 
a  problem  quite  different  from  that  of  large  levels  in  a  low- 
grade  mine.  Although,  before  the  eventual  exhaustion  of 
a  mine,  it  may  be  necessary  to  drive  intermediate  drifts, 
it  is  obvious  that,  for  exploratory  purposes  in  a  fairly 


THE  INTERVAL  BETWEEN  LEVELS     401 

uniform  lode  of  low  grade,  it  is  not  necessary  to  make 
these  longitudinal  cuts  near  together.  The  money  spent 
in  extending  such  levels  remains  unproductive  until  stop- 
ing  begins ;  and,  in  big  mines,  not  only  is  capital  thus  ex- 
pended unprofitably,  but  the  maintenance  of  drifts  not  in 
use  represents  a  constant  charge  which  it  is  advisable  to 
avoid.  At  the  Calumet  &  Hecla,  levels  were  placed  100 
ft.  apart,  as  measured  on  the  dip  of  the  lode,  or  about  65 
ft.  in  vertical  interval.  In  this  case  the  drift  did  not  even 
fulfil  an  exploratory  purpose,  because  it  included  only  a 
fraction  of  the  total  width  of  ore.  The  Tamarack  ben- 
efited by  the  error  of  its  big  neighbor,  and  the  levels  were 
run  every  180  ft.,  measured  vertically,  giving  300  ft. 
along  the  lode.  Afterward,  sub-levels  were  extended  at 
intervals  of  100  ft.  At  the  Burra  Burra  mine,  of  the 
Tennessee  Copper  Company,  the  main  levels  are  300  ft. 
apart,  but  the  lode  is  crosscut  at  each  100  ft.  of  sinking; 
and,  when  actual  extraction  begins,  sub-levels  are  ex- 
tended from  the  crosscuts.  These  initial  crosscuts  and 
the  less  frequent  main  levels  are  adequate  for  exploratory 
purposes;  for  stoping,  the  sub-levels  are  needed  in  order 
to  afford  points  of  attack  and  to  facilitate  transport.  In  a 
mine  the  output  of  which  goes  to  a  smelter,  it  is  unde- 
sirable to  drop  the  ore  down  chutes  of  excessive  height, 
because  a  powdery  product  hinders  the  working  of  the 
furnace.  When  the  ore  is  destined  for  a  stamp-mill,  the 
disintegration  is  not  injurious;  on  the  contrary,  it  per- 
forms part  of  the  work  of  the  crushing  machinery. 

Drainage  is  another  factor.  In  wet  ground,  it  is  ex- 
pedient to  run  the  new  level  at  such  an  interval  below 
the  working  drift  that  the  block  last  opened  up  will  be- 
come drained  while  the  upper  one  is  being  stoped.  Ex- 
cessive water  hinders  mining  and  adds  to  all  the  costs  of 
operation ;  by  adjusting  the  lifts  between  levels,  the  pump- 
ing can  be  limited  and  the  drainage  of  the  lode  can  be 
regulated.  In  mines  where  the  loose  ground  of  a  fault 


402  THE  ECONOMICS  OF  MINING 

either  coincides  with,  or  crosses,  the  lode,  it  will  be  found 
that  the  water-level  follows  the  main  shaft  as  sinking 
progresses.  Faults  also  affect  the  problem  in  hand  be- 
cause, when  a  lode  is  subject  to  such  dislocations,  it 
becomes  necessary  to  drift  at  short  vertical  intervals  in 
order  to  determine  the  position  of  the  vein  or  of  the  ore- 
shoot.  A  lift  of  several  hundred  feet  is  impracticable 
under  such  conditions,  because  a  displacement  of  the  lode 
might  change  the  whole  plan  of  development  and  render 
such  a  level  inoperative.  In  mines  of  this  kind  (and  most 
metal  lodes  are  liable  to  such  eccentricities  of  behavior) 
the  function  of  a  drift  is  exploratory  first,  and  operative 
afterward ;  it  serves  the  purpose  of  testing  the  Tein  and  of 
finding  the  ore-shoot  before  it  is  turned  into  an  under- 
ground artery  for  the  transport  of  material  to  the  shaft. 


THE  COST  OF  MINING-II. 

BY  W.  R.  INGALLS. 

(July  15,  1905-) 

In  my  first  paper  on  this  subject,  which  has  been  com- 
mented upon  by  Messrs.  Finlay,  Argall,  Tays  and  Brown, 
I  did  not  look  forward  to  a  discussion  of  the  advisability 
of  keeping  accounts  which  would  show  the  cost  of  min- 
ing, nor  did  I  contemplate  a  discussion  of  the  itemization 
of  mining  costs,  except  incidentally.  My  purpose  was 
rather  to  draw  out  the  experience,  reduced  to  dollars  and 
cents,  in  mining  under  various  conditions,  and  by  itemiza- 
tion and  classification  of  costs  to  analyze  the  differences  in 
conditions.  Mr.  Finlay  appreciated  this  intention,  and  re- 
marked that,  even  in  cases  of  wide  difference  of  condi- 
tions, there  would  still  be  found  operations  in  which  the 
conditions  were  more  or  less  parallel.  It  was  far  from  my 
purpose  to  uphold  the  desirability  of  attaining  a  low  cost 
of  mining  per  ton,  at  expense  of  the  maximum  profit ;  in- 
deed, such  argument  as  I  presented  on  that  topic  was 
quite  the  reverse;  but  I  aimed  to  draw  out  the  reasons 
why  mining  costs  should  vary  so  much,  not  only  under 
obviously  dissimilar  conditions,  but  also  under  conditions 
that  appear  approximately  analogous,  or  at  least  that  may 
so  appear  to  those  who  have  not  minutely  studied  them. 

In  considering  the  cost  of  mining  from  this  viewpoint,  I 
have  taken  the  trouble  to  compile  the  following  data, 
which  are  mostly  from  official  reports,  either  the  originals 
or  the  abstracts  published  in  THE  ENGINEERING  AND 
MINING  JOURNAL.  They  refer  only  to  gold,  silver,  cop- 
per, lead  and  zinc  mines  ;  coal  and  iron  mines  are  excluded 
from  the  scope  of  this  inquiry ;  and  the  case  of  the  Lake 
Superior  copper  mines  is  reserved  for  a  separate  article. 
Few,  if  any,  engineers  being  familiar  with  the  funda- 
mental conditions  which  determine  the  cost  of  mining  in 


404  THE  ECONOMICS  OF  MINING 

all  of  the  districts  mentioned,  explanations  from  those  who 
are  acquainted  with  them  will  surely  be  welcomed,  as  will 
be  also  such  further  data  as  will  throw  more  light  on  the 
subject. 

Grass  Valley,  California. — North  Star  Mines  Company 
in  1902  mined  17,399  tons  of  ore,  at  cost  of  $15.90  per 
ton,  divided  as  follows :  Operating  expenses,  $7.76 ;  gen- 
eral expense,  $1.11  ;  extraordinary  expense,  $0.57;  devel- 
opment, $5.04;  improvements,  $1.42. 

Calaveras  County,  California. — Utica  Mine.  Large  vein 
on  Mother  Lode.  In  producing  about  300  tons  of  ore  per 
day  there  are  required  two  lo-hour  shifts,  each  consisting 
of  12  miners,  12  helpers,  16  shovelers  and  6  trammers; 
total,  45 ;  in  addition  to  which  a  crew  of  10  timbermen  is 
employed.  Miners  are  paid  $3 ;  timbermen,  $3  ;  helpers, 
shovelers  and  carmen,  $2.50  per  day.1 

Sutler  Creek,  California. — Central  Eureka  Mining 
Company,  in  1902,  produced  43,545  tons  of  ore,  at  cost  of 
$1,795  f°r  mining,  and  $0.519  for  developing.2 

Randsburg,  California. — Yellow  Aster  Mining  &  Mill- 
ing Company.  Eugene  H.  Barton3  reported  the  cost  of 
mining  14,601  tons  of  ore  as  follows : 

Mining.  Cost.  Per  Ton. 

Labor    $10,696.69  $0.73260 

Timbering    803.55  0.05500 

Timber   2,661.47  0.18228 

Powder  580.68  0.03977 

Fuse 93-90  0.00643 

Caps 44-97  0.00308 

Lights   306.62  0.02100 

Blacksmithing 498.32  0.03414 

Development  628.72  0.04306 

Haulage    643.90  0.04410 

Hoisting • 697.92  0.04780 

Total   .  $17,656.40        $1.16620 


*J.    H.    Collier,   Jr.,    Transactions    American    Institute    Mining 
Engineers,  1899. 
*Idem,  June  6,  1903,  p.  869. 
"THE  ENGINEERING  AND  MINING  JOURNAL,  January  28,  1904. 


THE  COST  OF  MINING  405 

General   Expenses.  Cost.  Per   Ton. 

Miscellaneous $1,460.10  $0.10000 

Assaying 160.61  o.oiioo 

Salaries   950.87  0.06507 

Tailing    313-33  0.02146 

Incidentals 440.92  0.03020 

Total   $3,325.83        $0.22773 

The  general  expense  is  to  some  extent  chargeable  to  the 
milling.  Water  is  obtained  from  wells  6.5  miles  from  the 
mine,  whence  it  is  pumped  at  a  cost  of  IQC.  per  1,000  gal., 
which  comes  to  22.O5C.  per  ton  of  ore,  no  part  of  this  be- 
ing included  in  the  cost  of  mining.  The  mine  is  equipped 
to  produce  500  tons  of  ore  per  day.  Fuel-oil  costs  4.50. 
per  gal. ;  lumber,  $32.50  per  M.  The  rate  of  wages  is  as 
follows :  Miners,  9  hours,  $3 ;  muckers,  9  hours,  $2.50 ; 
carmen,  9  hours,  $3 ;  timbermen,  9  hours,  $3.50 ;  amal- 
gamators, 12  hours,  $4;  stationary  engineers,  12  hours, 
$4;  hoisting  engineers,  8  hours,  $3.50;  pump-men,  12 
hours,  $3.50. 

Black  Hills,  South  Dakota. — Homestake  mines.  Vein 
of  mineralized  schist,  300  to  500  ft.  wide.  Worked  par- 
tially open-cast,  partially  underground.  In  1898  mining 
cost,  $2.17;  general  expense,  $0.14.  In  the  year  ended 
June  I,  1903,  the  cost  of  mining  1,279,075  tons  of  ore  was 
$2.04,  not  including  general  expense ;  total  cost,  exclusive 
of  milling,  was  $2.37.  Mine  opened  to  depth  of  1,100  ft. 

Bingham,  Utah. — Massive  deposits  of  pyrite  (gold,  sil- 
ver and  copper-bearing)  in  limestone,  dipping  moderate- 
ly. Operated  chiefly  through  adits.  Timbering  with 
square  sets. 

Utah  Consolidated  Mining  Company ;  Highland  Boy 
mine,  operated  through  six  adits  to  7oo-ft.  level,  and  by 
shaft  to  800  ft.  Ore  transported  by  aerial  tramway  12,700 
ft.  to  Bingham  station,  thence  by  rail  to  smelter  at  Mur- 
ray. In  1902  produced  167,713  tons  of  ore  at  a  cost  of 
$1.45  for  mining  and  tramway,  $0.25  for  exploration  and 
development;  in  1903,  produced  190,256  tons,  at  a  cost  of 


406  THE  ECONOMICS  OF  MINING 

$1.78  for  mining  and  tramway,  $0.033  f°r  exploration  and 
development ;  general  expenses  not  included. 

Mercur,  Utah. — Deposits  of  gold  ore  in  limestone,  lying 
approximately  flat.  Mercur  Mining  &  Milling  Company, 
in  the  year  ending  June  30,  1902,  extracted  ore  at  cost 
of  $1.41  per  ton,  including  general  expense;  in  year  end- 
ing June  30,  1903,  extracted  346,359  tons,  at  cost  of  $1.30 
per  ton.  Mining  done  by  caving  system.  Mine  operated 
through  adit,  with  electric  haulage,  two  locomotives,  10- 
h.p.  each,  capable  of  hauling  20  tons  at  six  miles  per  hour. 

Frisco,  Utah. — Horn  Silver  Mining  Company  in  1900 
produced  27,411  tons  of  ore,  at  cost  of  $4.88  per  ton,  of 
which  labor  on  ore  was  $2.087  J  on  dead  work,  $0.703 ;  on 
surface,  $0.850;  supplies,  timber,  fuel,  etc.,  $1.24. 

Cripple  Creek,  Colorado. — Gold  mining  in  veins  in  igne- 
ous rocks  (chiefly  andesite).  Mines  operated  through 
shafts ;  depths  moderate ;  water  variable.  Miners  receive 
$3.40  per  day  of  eight  hours  (42.5^  per  hour).  Coal  costs 
about  $4.60  per  ton.  Considerable  timbering  required. 
Mining  costs  generally  from  $2.50  to  $3.50  per  ton  of  ore 
hoisted,  including  taxes,  insurance  and  general  expense. 
Sorting  of  the  ore  on  the  surface  materially  increases  the 
cost  per  ton  of  ore  shipped.4 

Stratton's  Independence,  Ltd.,  in  year  ending  June  30, 
1902,  mined  230,699  tons  of  ore,  at  cost  of  $4.18  per  ton, 
of  which  $1.27  per  ton  was  on  account  of  development 
work.  The  latter  comprised  264  ft.  of  shaft,  1,521  ft.  of 
raises,  160  ft.  of  winzes,  and  11,738  ft.  of  drifts  and  cross- 
cuts. Total  depth  of  main  shaft,  1 ,430  ft.  In  year  ending 
June  30,  1903,  229,797  tons  were  hoisted,  at  total  expense 
of  $3.70  per  ton,  of  which  $0.87  was  for  development, 
which  comprised  1,716  ft.  of  raises  and  8,387  ft.  of  drifts 
and  cross-cuts. 

*J.  R-  Finlay,  THE  ENGINEERING  AND  MINING  JOURNAL,  Novem- 
ber 21,  1903. 


THE  COST  OF  MINING  407 

Leadville,  Colorado. — Blanket  vein,  containing  massive 
shoots  of  argentiferous  galena,  blende  and  pyrites.  Oper- 
ated through  shafts;  depths  moderate.  Rather  larger 
quantity  of  water  to  pump.  Timbering  with  square  sets. 
Miners  receive  $3  per  day.  Mining  costs  large  producers 
about  $2  per  ton,  including  general  expense. 

Ouray,  Colorado. — Camp  Bird  vein,  a  fissure  dipping 
about  70° ;  average  width,  6  to  7  ft.  Vein  material,  quartz, 
impregnated  with  gold,  galena,  pyrite  and  chalcopyrite. 
Ore  occurs  in  shoots,  wherein  the  grade  is  subject  to  con- 
siderable variation.  Mine  opened  by  adit  2,200  ft.  long. 
Timbering  is  required  only  in  the  raises,  winzes,  chutes 
and  floors  of  stopes.  About  40%  of  the  ore  broken  in 
stoping  is  taken  out,  the  remainder  is  left  in  the  stopes; 
the  percentage  of  waste  trammed  out  is  small.  Mine 
worked  by  two  8-hour  shifts  ;  3.25-in.  machine  drills  most- 
ly in  favor ;  40%  dynamite  ^compressors  driven  by  electric 
power.  Large-machine  men  receive  $4.50  per  shift ;  help- 
ers, $4 ;  small-machine  men,  $4 ;  smiths,  $4 ;  helpers,  $3.25  ; 
timber-men,  $4  to  $4.50 ;  helpers,  $3 ;  shovelers,  $3 ;  tram- 
mers, $3 ;  enginemen,  $4.50." 

During  the  year  ending  April  30,  1903,  there  were 
broken  111,245  tons  of  ore,  wet  weight,  of  which  71,793 
tons  were  delivered  to  the  mill  and  39,452  tons  were  left 
in  the  stopes.  The  ore  milled,  less  moisture,  amounted  to 
66,825  tons.  The  cost  of  mining,  not  including  general 
expense,  was  $367,838,  or  $5.50  per  ton  on  the  ore  deliv- 
ered to  the  mill  (dry  weight),  or  $3.50  per  ton  on  the  ore 
broken  (wet  weight). 

Telluride,  Colorado. — Liberty  Bell  mine,  1902,  pro- 
duced about  7,500  tons  of  ore  per  month,  at  cost  of  $2  to 
$2.30,  not  including  general  expense. 

Butte,  Montana. — Immense*  veins,  dipping  steeply,  in 
granite.  Ore,  chalcocite,  bornite  and  enargite,  with 

5  C.  W.  Purington,  Transactions  American  Institute  Mining  En- 
gineers, 1902. 


408  THE  ECONOMICS  OF  MINING 

pyrite,  in  a  quartzose  and  granitic  gangue.  Veins  attain 
a  width  of  100  ft.  and  more,  10  to  20  ft.  stopes  being  com- 
mon. The  cost  of  mining  at  Butte  ranges  from  $3  to  $4 
per  ton. 

The  following  returns  were  made  by  the  Butte  copper 
companies  to  the  assessors  of  Silver  Bow  county,  Mon- 
tana:6 Colusa  Parrot,  265,113  tons,  mining  cost,  $3.70 
per  ton;  Butte  &  Boston,  245,333  tons,  $3.27;  Parrot, 
253,284  tons,  $2.81  ;  Boston  and  Montana,  907,227  tons, 
$2.61 ;  Anaconda,  1,392,835  tons,  $3.49;  Washoe,  106,588 
tons,  $3.79;  Montana  Ore  Purchasing  Company,  293,332 
tons,  $3.54.  These  figures,  submitted  for  taxation  pur- 
poses, are  of  little  technical  value. 

Anaconda  Copper  IVJining  Company :  The  production 
in  1897-1898  was  628,051  tons  of  ore  from  the  Anaconda 
mine,  and  813,487  from  the  Syndicate  mine.  The  cost  per 
ton  was  as  follows: 

Item.  Anaconda.         Syndicate. 

Labor    $2.470  $2.244 

Explosives o.  105  o.  133 

Coal    0.144  0.144 

Supplies    o.no  0.108 

Assaying   o .  007  o .  006 

Administration    and   general   expenses....  0.177  0.138 

Personal  injuries 0.028  0.023 

Timber 0.290  0.305 

Water   0.018  0.014 

Repairs  and  renewals   0.327  0.219 

New  constructions    0.237  o.no 


Total  $3.913  $3-444 

Cceur  d'Alene,  Idaho. — Steeply  dipping  fissure  veins 
and  shear  zones,  containing  large  and  wide  bodies  of  sil- 
ver-lead ore.  Mostly  opened  by  adits  ;  water  power  avail- 
able and  generally  used;  timber  abundant  and  cheap. 
Miners  receive  $3.50  per  day.  Three  methods  of  mining 
employed:  (i)  timbering  (square  sets)  ;  (2)  filling;  (3) 

THE  ENGINEERING  AND  MINING  JOURNAL,  July  25,  1904. 


THE  COST  OF  MINING  409 

timbering  and  filling.  Cost  of  mining  and  milling,  $2.50 
to  $3.50  per  ton  (Finlay). 

The  Bunker  Hill  &  Sullivan  Mining  Company  in  1902 
extracted  260,500  tons  of  ore,  at  cost  of  $2.09  per  ton. 
Miners  receive  $3.50 ;  muckers,  $3  ;  timbermen,  $4.  In 
1903  the  cost  of  mining  288,713  tons  of  ore  was  $1.633 
per  ton,  not  including  general  expense,  which  came  to 
ii.5c.  per  ton.  All  the  ore  was  trammed  from  the  mine 
by  electric  haulage  through  the  Kellogg  tunnel  (12,000  ft. 
long),  at  a  cost  of  7c.  per  ton.  In  addition  to  the  ore, 
47,000  tons  of  waste  was  trammed.  Drifts,  cross-cuts, 
raises  and  winzes  cost  an  average  of  $7.31  per  foot,  4,043 
ft.  being  driven. 

Douglas  Island,  Alaska. — Auriferous  dike  of  syenite  in 
carbonaceous  slate.  Dike  stands  at  steep  angle  and  attains 
width  of  420  ft.  Situated  close  to  the  sea,  with  respect  to 
which  the  position  of  the  orebodies  has  great  influence  on 
the  methods  and  costs  of  mining.  Mines  formerly  worked 
chiefly  open-cast ;  henceforth  the  underground  mining  will 
be  the  more  important.  Miners  receive  $2.50  per  day, 
with  board  and  lodging. 

Alaska-Treadwell,  opened  by  shafts  to  900  ft.  below 
sea-level.  Water  less  than  50  gal.  per  min. ;  levels  opened 
no  ft.  and  150  ft.  apart;  no  timbering  required;  hoisting 
by  skips  from  storage  bins.  Vertical  pillars  left  to  support 
walls,  20%  loss  of  ore  estimated.  In  stoping,  one  drill 
breaks  34.96  tons  of  ore,  with  consumption  of  12.53  Ib. 
of  No.  2  dynamite,  in  10  hours,  in  addition  to  which  0.85 
Ib.  of  powder  per  ton  of  ore  is  consumed  in  bulldozing. 

In  the  year  ending  May  30,  1903,  the  Alaska-Treadwell 
mined  759,625  tons  at  cost  of  0.9022,  not  including  gen- 
eral expense.  Development  work  amounted  to  6,145  ft- 
An  average  of  33  machine  drills  was  employed  in  the 
mine  (7  on  development,  4  on  cutting  out,  7.5  in  pits,  and 
14.5  in  underground  stoping).  The  total  of  holes  drilled 
was  783,360  ft.,  and  of  ore  broken  906,625  tons,  making 


410  THE  ECONOMICS  OF  MINING 

an  average  of  1.14  tons  per  foot  of  hole  drilled.  The  aver- 
age work  per  machine  per  10  hours  was  34.4  ft.  of  hole 
drilled.  Machine  drillers  in  the  open  pit  were  paid  $3.50 
per  day,  with  board  and  lodging ;  underground,  $2.50, 
with  board  and  lodging;  the  difference  being  due  to  the 
extra-danger  in  the  open-cuts. 

Alaska-Mexican,  1900:  Mined  166,449  tons,  at  cost  of 
$1.0834  per  ton,  not  including  general  expense.  Develop- 
ment work,  3,094  ft.  In  1901,  mined  178,960  tons,  at  cost 
of  $1.1923.  Development  work,  5,441  ft.  In  1902,  mined 
207,455  tons,  at  cost  of  $1.059.  Development  work,  5,286 
ft.  Scale  of  wages:  Machine  drillers,  $2.50;  helpers, 
$2.25 ;  common  labor  (white),  $2;  smiths,  $4;  plus  board 
and  lodging  in  each  case.  Indian  labor,  $2,  without  board 
or  lodging. 

Alaska  United,  1901  :  Ready  Bullion  mine — 171,642 
tons  raised,  chiefly  from  450  to  6oo-ft.  levels.  Cost  per 
ton,  $1.1788,  not  including  general  expense.  Develop- 
ment work,  2,535  ft.  "7oo-ft."  mine — 89,840  tons  raised, 
chiefly  from  400- ft.  level.  Cost,  $1.2281  per  ton.  Devel- 
opment work,  1,708  feet. 

Rossland,  British  Columbia. — Zones  of  sheared  rock, 
mineralized  with  auriferous  pyrrhotite  and  chalcopyrite 
up  to  width  of  100  ft.  or  more,  dipping  at  about  70°. 
Vein-filling  very  hard ;  stopes  timbered  with  square  sets ; 
ore  stands  10  cu.  ft.  to  the  ton.  About  20%  is  sorted  out 
as  low-grade  (to  second-class  dump).  Timbering  costs 
about  2  ic.  per  ton  of  ore  raised,  27c.  per  ton  of  ore 
shipped.7 

Center  Star  Mining  Company,  operating  on  large  vein 
of  auriferous  copper  ore.  The  costs  per  foot  of  develop- 
ment work  and  per  ton  of  ore  mined  during  the  year  end- 
ed September  30,  1903,  were  as  indicated  in  the  following 
table : 

7B.  McDonald,  Journal  Canadian  Mining  Institute,  Vol.  VI, 
p.  129. 


THE  COST  OF  MINING  411 


Development. Mining, 

Winzes,  Raises,  Drifting,                  per 

per  ft.  per  ft.  per  ft.                    ton. 

Drilling    $6.10  $7.31  $4-53            $0.405 

Blasting  2.48  2.40  1.08             0.030 

Explosives    3.13  3.72  2.72              0.145 

General  mine  labor....  0.51  0.64  0.43              0.040 

Mine  lighting,  candles.  0.26  0.19  0.14              0.015 

Mine  lighting,  electric.  0.30  0.22  0.13              o.oio 

Smithing   i.oo  1.14  0.72             0.065 

Tramming    and    shov- 
eling, direct  5-5i  0.65  i. 21              0.240 

Tramming    and    shov- 
eling, apportioned. ..  0.64  0.35  0.42              0.085 

Timbering,  labor 1.81  3.08  0.02              0.190 

Timbering,  material.  ..  0.33  0.57  o.oi              o.oio 

Machine  drill  fittings.  0.86  0.94  0.60             0.055 

General  mine  labor 1.57  1.18  0.84              0.090 

Hoisting,  underg'nd. ..  4-79  ....  ....               

Hoisting,  main  shaft..  1.48  0.89  0.94 

Compressed    air 1.74  2.08  1.07 

Mine  ventilation 0.23  0.17  0.13 

Pumping    0.71  1.09  0.34 

Assaying    0.55  0.47  0.14 

Surveying    0.20  0.17  o.n 

General  expense 3.57  2.71  1.51 


Totals    $38.77          $29.97          $17.09  $2.065 

The  development  work  done,  and  the  cost,  and  the  aver- 
ages per  foot,  are  shown  in  the  table  below : 

Feet.  Amount.  Per  ft. 

General   work    $3,058        

Raises   168.0  5,577  $29-97 

Winzes    79.0  3,062  38.77 

Drifting    2,903.5  49,622  17.09 

Totals    3,168.5        $61,319        $19-35 

Under  general  work  are  included  stations,  re-timber- 
ing, machinery  and  equipment,  repairs  and  maintenance. 

The  total  quantity  of  ore  mined  and  sold  was  88,387 
tons,  of  which  3,934  tons  came  from  development  work. 
The  average  cost  of  mining,  viz.,  $2.065,  is  computed  on 
the  84,453  tons  of  ore  stoped.  The  development  work, 
costing  $61,319,  amounted  to  about  $0.725  per  ton  on  the 
ore  stoped. 

Ymir  Gold  Mines,  Ltd.,  in  1901,  mined  70,640  tons  of 
ore,  at  average  cost  per  ton  of  $1.814  for  mining,  $0.150 


412  THE  ECONOMICS  OF  MINING 

for  administration  and  $0.279  for  general  and  contingent 
expense ;  the  last  two  items  should  be  proportioned  be- 
tween mining  and  milling. 

Ducktown,  Tennessee. — Huge  lenticular  deposits  of 
cupriferous  pyrite  in  schist.  Lenses  vary  from  a  few  feet 
to  150  ft.  wide,  with  great  length,  dipping  steeply. 
Opened  as  yet  to  only  moderate  depth.  Ore  stoped  out  in 
chambers ;  no  timbering. 

Tennessee  Copper  Company,  1902,  mined  250,769  tons, 
at  $0.8411,  not  including  general  expense. 

Flat  River,  Missouri. — Immense  shoots  of  lead  ore ; 
galena  disseminated  in  magnesian  limestone ;  position  ap- 
proximately flat;  stopes  80  ft.  high  and  60  ft.  wide  not 
uncommon.  Mines  operated  through  shafts,  300  to  500 
ft.  deep,  with  efficient  equipment.  No  timbering  required  ; 
water,  200  to  2,000  gal.  per  min.  Miners  receive  $1.85; 
shovelers,  $1.75;  all  nine  hours.  Coal  (from  southern 
Illinois)  costs  $2.20  per  ton.  Mining  cost,  about  $i  per 
ton,  including  general  expense  and  delivery  to  mill,  on 
basis  of  about  i  ,000  tons  per  day,  but  not  including  devel- 
opment work,  construction  or  amortization  of  plant.  These 
statements  refer  to  the  conditions  before  the  recent  strikes, 
as  result  of  which  wages  have  been  increased,  time  re- 
duced to  eight  hours,  and  efficiency  of  labor  decreased, 
somewhat  increasing  the  cost  of  mining.  Prospecting  in 
this  district,  both  from  surface  and  underground,  is  done 
chiefly  by  diamond  drilling. 

Joplin,  Missouri. — Deposits  of  zinc-blende  and  galena 
in  lenses  of  chert  in  limestone ;  also  sheet  deposits  of  sim- 
ilar ore.  Considerable  variation  in  character  of  ore  as  to 
hardness,  and  as  to  roof,  but  the  sheet  deposits  are  gener- 
ally very  hard.  The  deposits  lie  approximately  flat  and  at 
moderate  depth,  say  150  to  250  ft.  Life  of  the  mines  is 
short  and  conditions  decree  cheapness  of  plant  rather  than 
durability.  Ground  is  not  developed  ahead,  except  by 
churn-drilling  from  surface.  Cost  of  opening  mine  to 


THE  COST  OF  MINING  413 

produce  75  to  100  tons  of  ore  in  10  hours,  including  con- 
centrating mill,  is  about  $15,000.  Miners  are  paid  $2.25 
and  shovelers  $2  per  day.  About  25  to  37.5  tons  of  ore  is 
stoped  per  drill  per  day.  The  cost  of  mining  in  ground 
that  requires  no  timbering  is  approximately  as  follows : 
Miners  and  helpers,  I7c. ;  trammers  and  shovelers,  8c. ; 
drill  sharpening,  etc.,  50.;  explosives,  roc. ;  hoisting  (la- 
bor), 6c. ;  supplies,  4c. ;  fuel,  QC.  ;  supervision,  gc. ;  total, 
68c. ;  not  including  any  pumping  or  general  expense.  The 
actual  costs  in  six  different  mines  operated  during  the 
same  year  were  as  follows : 

Surface   plant $0.000  $0.000  $0.004  $0.010  $0.017  $0.006 

Rep.  surface  plant....  0.007  0.005  0.002  o.on  0.017  0.008 

Underground   plant...  o.ooo  o.ooo  0.002  0.016  0.053  0.016 

Rep.  und'ground  plant,  o.ooo  0.005  o.ooi  0.021  0.040  0.014 

Hoisting    0.023  0.032  0.023  0.035  0.042  0.031 

Fuel 0.028  0.031  0.036  0.040  0.067  0.040 

Mining   0.248  0.258  0.241  0.231  0.282  0.252 

Development    o.ooo  0.041  0.022  o.on  0.023  0.019 

Blacksmithing    0.029  0.033  0.041  0.034  0.035  0.034 

Shoveling  and  tram'g.  0.121  0.174  0.123  0.148  0.161  0.143 

Explosives    0.085  0.073  0.096  o.uo  0.125  0.008 

Tools    0.003  0.003  0.004  0.020  0.015  0.009 

Timber  and  track....  0.005  0.003  0.004  o.on  0.028  o.oio 

Lighting  0.004  0.007  0.006  0.008  o.oio  0.007 

Lubricating  o.ooo  o.ooo  o.ooo  o.ooo  o.ooi  o.ooo 

Pumping   o.ooo  o.ooo  o.ooo  o.ooo  0.020  0.004 

Accidents 0.002  o.ooo  0.002  o.ooo  0.009  0.003 

Totals   $0.56    $0.66    $0.60    $0.71     $0.94    $0.70 

The  sheet-ground  of  the  Joplin  district  is  a  mineralized, 
fine-grained  chert,  averaging  about  8  ft.  in  thickness,  ex- 
tremely hard  and  requiring  the  heaviest  type  of  machine- 
drills. 


INDEX 


Accounts      (mine),      card 

system    for 80 

African   Metals   Co 119 

Alaska  Mexican  mine 335 

Alaska  Treadwell  mine. 303,  333 

Aldrich   electric   pump 381 

Amending     Companies 

Bill    210 

American       Institute       of 

Mining    Engineers 66 

Amortization 175,  221,  255 

Area  stoped  out  as  con- 
tract basis 27 

Argall,    Philip 44 

"Cost   of    Chlorinating 
Cripple  Creek  Ores" .  356 

"Cost  of  Mining" 342 

Associated  Northern 
Blocks  mine 283 

Bain,  H.  R,  "Mining  Costs 
at  Cripple  Creek" 154 

Baltic  Copper  mine,  card 
system  in  use  at 80 

Baltic  mine 96 

Bancroft,  Geo.  J.,  "Mine 
Equipment  and  Ore- 
Reserves"  227 

Barton,  Eugene  H.,  "Min- 
ing and  Milling  in  the 
Mojave  Desert" 157 

Basis  of  value 300 

Bathurst,   F.   H 275 

"Mine  Reserves" 339 

"Secret  Reserves"...    .  206 


Benjamin,  Edward  H 15 

Bingham,  Utah 405 

Birch,  Stephen 320 

Black  Hills,  S.  Dak 404 

Bookkeeping,      suggestions 

as  to  labor-saving  in....  64 
Boulder  Perseverance. 275,  281 
Boulder  Perseverance 

Commission    338,  339 

Broad,    Wallace 202 

"Mining  in  Rhodesia".   167 

Brown,    Nicol 62 

Brown,  R.  G 257 

"Cost  of  Mining" 347 

"Cost  per  Ton  as  a 
Basis  of  Mine  Val- 
uation"    56 

"Gold  Mine  Accounts".     91 
"Mine   Equipment  and 

Ore-Reserves"   283 

"Some    Pumping 

Data"    378 

"Treatment  Capacity 
and  Ore-Reserves"..  217 

Brunswick  mine 378 

Bucyrus  dredges 369 

Burra  Burra  mine 401 

Butte,  Mont 407 

Calaveras   county,    Cal ....  404 
California,    gold    dredging 

in   268 

Calumet  &  Hecla  mine.  198,  401 
Card  systems  for  mine  ac- 
counts     94,    80 


416 


INDEX 


Carter,  T.  Lane 10 

"Mine  Labor  and  Costs 
on     the    Witwaters- 

rand"   150 

Carterville  Webb  City  dis- 
trict      165 

Center  Star  mine 52 

Cceur  d'Alene,  Idaho 408 

Cole,  Wm.  C 86 

Colonial  Mines  Syndicate.  Ill 
Commission,  Boulder  Per- 
severance      338 

Commission,    Royal .......  281 

Compafiia        Metallurgica, 

Mexico    64 

Companies    Acts 125 

Companies,  no-liability....  260 

Comstock,  Theo.  B 92,    93 

"Card      Systems      for 
Mine   Accounts"....     94 

"Mine   Accounts" 62 

Consolidated   Mines  Selec- 
tion Co 119 

Contract  basis — area  stoped 

out    27 

Contract  system  in  mining.    23 

Cornish  pump  system 381 

Cornucopia  mine 230 

Cosmopolitan  mine ....  248,  359 
Cost  of  Chlorinating  Crip- 
ple Creek  Ores 356 

Cost  of  Mining.  .323,  324, 
333,    342,   347,    350,    372, 

384,  387 403 

Cost   of  mining   and   mill- 
ing      359 

Cost  per  ton  as  a  basis  of 

mine  va-luation 56 

Costs,  dredging 269 

Costs,  engineers'  estimates.  264 
Costs,     gravel     mining     in 
Alaska     and     Northwest 
Canada    .  .  317 


Costs,    mining,    at    Cripple 

Creek    103 

Cripple    Creek 406 

costs  at 246 

leasing  at 301 

mining  costs  at 103,  154 

mining  problems   at...  107 
ores,    cost    of    chlori- 
nating   356 

Cripple  Creek  and  Lake 
View  costs  contrasted. . .  48 

Crown   Reef  mine 244 

Curie,  J.  H 17,  77,  87,  101 

"Ore-Reserves  in  Gold 

Mines"    249 

Cyanidation  in  Rhode- 
sia   147,  172 

Daly,  H.  J 208 

Darlington,  John 120 

Day's  work  defined 26 

Deep    mining. 390 

Deep    level    mines   on    the 

Rand    235 

Delaware  &  Hudson  Co..  223 

Denny,  G.  A 92 

"Economic     Ratio     of 
Treatment     Capacity 
to   Ore-Reserves"...  232 
Denny,  H.  S.,  "Ore-break- 
ing and   Sorting  on   the 

Rand"    68 

Denton,  F.  W 94 

"A    Card    System    for 
Mine   Accounts". ...     80 

Diehl    process 44 

Douglas   Island 409 

Dredges,   Bucyrus 369 

Dredging  at  Oroville 367 

Dredging   costs 269 

Ducktown,   Tenn 412 

Economic  ratio  of  treat- 
ment capacity  to  ore- 
reserves  .  .  232 


INDEX 


417 


El  Oro  mine 116 

El  Oro  Mg.  &  Ry.  Co.,  40,  116 
Engineers'       estimate      of 

costs    264 

Equation,    personal 253 

Equipment      and      ore-re- 
serves. .180,  182,  185,244, 

278  302 

Exploration    Co.,    Ltd 112 

Extensions        of       mining 
plant,  payment  of 38 

Finance,    mining,    another 

aspect  of 190 

Finance,  mining,  some  as- 
pects   of..  110,    115,    119, 

122    . 125 

Finlay,  J.  R 154,  155 

"Cost  of  Mining" 333 

"Leasing     at      Cripple 

Creek" 301 

"Mining  Costs  at  Crip- 
ple   Creek" 103 

Flat  River,  Mo 412 

Freiberg  mining 185 

Frisco,  Utah 406  ' 

Futures,  appraising  of 98 

Gardner,  Frank 40 

Garthwaite,  E.  H 170 

Gold  dredging  in   Califor- 
nia    268 

Gold  Dredging  at  Oroville.  289 
Gold-mine  accounts. 34,  50,    91 
Gold    mining    as    an     in- 
vestment         17 

Gold  mining  in  Rhodesia.   135 
Gold     mines,     ore-reserves 

in    249 

Gold       mines,       valuation 

of   211,  255 

Golden  Cloud  mine 230 

Grant,     R.     J.,     "Cost     of 

Mining  and  Milling"... .  359 
Grass   Valley,    Cal 404 


Great    Boulder    Persever- 
ance mine 40,    47 

Great      Boulder      Proprie- 
tary     281 

Great  Fingall  Con.  Mg.  Co.    40 
Guggenheim      Exploration 
Co....  113,  115,  116,  117,  118 

Hall,   R.   N 202 

Hamilton,    Richard 281 

Hammond,  John  Hays 170 

Herzig,  C.  S.,  "No-Liability 

Companies" 260 

Hobart,   R,   Amortization.  221 
Hohl,  L.  J.,  "Dredging  at 

Oroville"    367 

Hoist  by  his  own  petard..  364 

Homestake  mine 303 

Hoover,  H.   C.,  50,  53,  62 
91,  181,  182,  187,  189,  194, 
195,    197,    199,   217,   224,  227 
"Economic     Ratio     of 
Treatment     Capacity 
to   Ore-Reserves"...  173 
"Gold       Mine       Ac- 
counts"         37 

"Ore-Reserves"   255 

"Ore      Treatment      at 

Kalgoorlie"    44 

"Valuation      of      Gold 

Mines" 211 

Hutchinson,   W.    S.,   "Cost 
of  Mining  Zinc   Ore   in 

the  Joplin  District" 160 

Humes,    James,    "Cost    of 

Mining"    384 

Ingalls,  W.  R 185,  257 

"Cost  of  Mining". 324,  403 
"Economic     Ratio     of 
Treatment     Capacity 
to   Ore-Reserves"...   194 
"Engineers'      Estimate 

of   Costs" 264 

"Mining  in  Missouri".  271 


418 


INDEX 


Ingersoll-Sergeant       rock- 
drills    386 

Institute    of    Mining    and 

Metallurgy    66 

Institution  of  Mining  En- 
gineers      66 

Interval  between  levels 400 

Investment  in  mines 87 

Inwood's    tables 311,  315 

Ivanhoe  mine 282 

Jenkins,    Chas.    V.,    "Gold 

Mining   Accounts" 50 

Johannesburg,       mining 

methods  at 22 

Joplin,   Mo 412 

Joplin,  costs  at 271 

Joplin      district,      cost      of 

mining  zinc  ore  in 160 

Joplin  zinc  ores,  cost  dia- 
gram for 163 

Kaffirs  as  sorters 12 

Kalgoorlie,    ore    treatment 

at    44 

Kalgurli  mine    283 

Kolar  district,   India 214 

Lake  View  consols.  ..  .122,  208 
Lake    View     and     Cripple 

Creek  costs  contrasted . .     48 
Lake  View  mill,  Kalgoor- 
lie, treatment  costs  at. . .     44 

Lassen  Mining  Co 15 

Lawrence,  Benj.  B....194,  255 
"Mine   Equipment  and 

Ore-Reserves"    189 

Leadville,   Col 407 

Leasing  at  Cripple  Creek.  301 
Lee,  Chester  F.,  "Notes  on 

Mine  Reports" 392 

Le  Roi  mine 122 

Levels,  intervals  between . .  400 

Main  Reef  Leader  mine..  245 


Mason   &    Barry 42 

Matabeleland,   mining   in..   167 

McDermott,   Walter 120 

Mercur,  Utah 406 

Milling  in  Rhodesia 172 

Mine   accounts 62 

Mine,  appraising  the  value 

of  101 

Mine   equipment   and   ore- 
reserves. .  .187,    189,   227,  285 
Mine    labor   and   costs    on 

the  Witwatersrand 150 

Mine  reports 398 

Mine  reports,  notes  on 392 

Mine   reserves 339 

Mine   valuation 1..311,  313 

Mine  valuation  by  Govern- 
ment         53 

Mines  Company,  Ltd 120 

Mines  Development  Co...  112 

Mines,  investment  in 87 

Mines,     investigation     and 

management  of 2 

Mines,   operation  of 3 

Mines    Selection    Co 120 

Mines,   valuation  of 5 

Mining,    causes   of   failure 

in   1 

Mining,  cost  of... 323,  324, 
333,    342,    347,    350,    372, 

384,  387 403 

Mining    costs    at     Cripple 

Creek    154 

Mining    costs,     gravel,     in 
Alaska    and     Northwest 

Canada    317 

Mining,   deep 390 

Mining  finance 129 

Mining  finance,  another  as- 
pect of .  190 

Mining       and       Financial 

Trust    112,  120 

Mining  investment 77 


INDEX 


419 


Mining  methods  at  Johan- 
nesburg         22 

Mining    and    milling,    cost 

of    359 

Mining  and  milling  in  the 

Mojave  desert 157 

Mining   in   Missouri 271 

Mining  in  Rhodesia. .  .167,  200 

Mining    risks 20 

Mining,  secrecy  in 309 

Missouri,   mining  in. .....  271 

Montreal  &  Boston 311 

Moreing,  C.  Algernon 38 

Moss,'   Frank   A 283 

Mountain   Copper  Co 42 

Mysore  Gold  Mining  Co. .     39 

Nicholson,  R.  B 282 

No-liability  companies....  260 
Notes  on  mine  reports...  392 

Ore-breaking    and    sorting 

on  the  Rand 68 

Ore-dressing,  assay  results 

as  a  guide  in 31 

Ore-reserves    258 

economic  limit  of 178 

economic       ratio       of 
treatment       capacity 

to    232 

in  gold   mines 249 

and  mine  equipment. .  285 
and     treatment     capa- 
city   173,  194 

Ore  sorting 8 

Ore     treatment     at     Kal- 

goorlie    44 

Oroville,   dredging 367 

Oroville,  dredging  cost. . . .  269 
Oroville,  gold  dredging  at.  289 
Oroya-Brownhill  mine.. 47,  276 
Ouray,  Colo 407 

Palmer,  C.  S.,  "Equipment 
and  Ore-Reserves"..       .  302 


Personal  equation,  the .  ...  253 

Pittsburg  Coal   Co 223 

Portland  Gold  Mining  Co.  256 

Portland   mine 333 

Promoters,    swindling 126 

Pump,  Aldrich  electric....  381 

Cornish  system 381 

Pumping  data,  some 378 

Purington,  C.  W.,  "Gravel 
Mining  Costs  in  Alaska 
and  Northwest  Canada".  317 

Rand,      ore-breaking     and 

sorting   on 68 

Rand,  unemployed  labor  on  152 
Rand,  value  of  mines  on..     20 

Randsburg,  Cal 404 

Reading  Co 223 

Ready  Bullion  mine 335 

Red        Mountain,        Colo., 

mines    .' 120,  124 

Reserves,    mine 339 

Reserves,    secret. 205,    206, 

275    281 

Resuing,   explained 9 

Resuing     in     underground 

work    131 

Rhodesia,      ancient      mine 

workings   in 169 

gold  mining  in 135 

gold  production  in 149 

mining  in 167,  200 

mining,  working  ex- 
penses    145 

Rickard,  T.   A 230 

"Appraising   Futures".     98 

"Basis  of  Value" 300 

"Cost  of  Mining". 323,  387 

"Deep   Mining" 390 

"Equipment  and  Ore- 
Reserves"  ..180,  182, 
185,  187,  189,  244, 
248  .  .  278 


420 


INDEX 


Rickard,  T.  A.,  "Gold  Min- 
ing as  an  Investment".  .     17 
"Hoist    by    His    Own 

Petard"    364 

"Intervals    between 

Levels"    400 

"Investment      in 

Mines"   87 

"Mine   Reports" 398 

"Mine   Valuation" 311 

"Mine     Valuation     by 

Government"    52 

"Mining  Investment"..     77 

"Mining   Risks" 20 

"Ore   Sorting" 8 

"Secret  Reserves" .  .205, 

275    281 

"Secrecy  in  Mining"..  309 
"Some  Aspects  of  Min- 
ing     Finance".  .110, 

115,  119,  122! 125 

"The    Personal    Equa- 
tion"      253 

"Valuation  of  Mines".       5 

Rix,  E.   A 378 

Roberts,  F.   C 167 

"Cost  of  Mining" 350 

"Gold  Mining  in  Rho- 
desia" .....' 135 

"Mining  in  Rhodesia".  200 
"Resuing     in     Under- 
ground Work" 131 

Roberts,  G.  M 283 

Rock-drills,  Ingersoll- 

Sergeant    386 

•  Rock-drilling  on  the  Rand.  152 
Roodefort  United  mine...  400 

Rossland,  B.  C 410 

Royal    Commission 281 

Secret  reserves. .  .275,  281,  286 

Secrecy  in  mining 309 

Shaft  sinking  by  hand....     15 


Sloss-Sheffield    Co 223 

Smith,   Hamilton 112,  117 

Smith,  Howard  D.,  and  E. 
W.        Stebbins,       "Gold 
Dredging  at  Oroville"..  289 
Sorting  at  Johannesburg..     10 

South  Reef  mine 245 

Spilsbury,   E.    G 194,  255 

"Mine   Equipment  and 

Ore-Reserves"    187 

St.    Francois   county,    Mo., 

costs    272 

Stamp-mills  in  Rhodesia..   146 
Stebbins  &  Smith,  "Dredg- 
ing Costs"  269 

Stevenson,    Robert,  '  "Val- 
uation of  Gold  Mines" . .  225 
Stratton,  W.  S.,  estate....  229 
Sutter  Creek,  Cal 404 

Tasmania  gold  mine 110 

Taylor,  John,  &  Sons.  .39,  112 
Tays,  E.  A.  H.,  "Cost  of 

Mining"  372 

Telluride,  Col 407 

Tomboy  Gold  Mines,  Ltd.  40 
Treatment  capacity  and 

ore-reserves  172,  217 

Twelvetrees,  W.  H 98 


Union    Iron   Co. 
United       States 
Code    . 


224 


Mineral 


139 


Valuation  of  gold  mines.. 

211,  225 

Valuation  of  mine 311,  313 

Valuation  of  mines  by  the 

cost  per  ton 56 

Valuation     of     mines     by 

Government    53 

Value,  basis  of 300 


INDEX 


421 


Victorian   Companies  Act. 

207,  340 

W.,  E.  H.,  "Mine  Valua- 
tion"    313 

Walker,  Edward,  "The 
Payment  of  Extensions 
of  Mining  Plant  out  of 

Revenue"    38 

Wanderer  mine,  Rhode- 
sia   142 

Wankie  coal-field 136 

War  Eagle  mine 52 

Waring  &  Son 30 

Waring,   W.   Geo.,   "Notes 

on  Zinc  Mining" 28 

West      Australian      mine- 
owners,  council  of....     53 
Western   Australia,  costs..  246 
Witwatersrand    10 


Witwatersand,  costs  at....   150 

Witwatersrand   mines 69 

Williams,  Percy,  "The  Val- 
uation of  Mines" 4 

Work  (day's)   defined 26 

Yale,  C.  G.,  "Gold  Dredg- 
ing in  California" 268 

Yellow  Aster  Mining  & 
Milling  Co 157 

Zinc  concentrate,  weight 
and  volume  of 29 

Zinc  minerals,  specific 
gravity  and  composi- 
tion of 31 

Zinc  mining  notes 28 

Zinc  ore  in  the  Joplin  dis- 
trict, cost  of  mining 160 

Zinc  ores,  valuation  of. ...     28 


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